Antaramian Props., LLC v. Basil St. Partners, LLC (In re Basil St. Partners, LLC), Case No. 9:11-bk-19510-FMD
| Decision Date | 19 August 2013 |
| Docket Number | Case No. 9:11-bk-19510-FMD,Adv. No. 9:12-ap-00863-FMD |
| Parties | In re: Basil Street Partners, LLC, Debtor. Antaramian Properties, LLC, Plaintiff, v. Basil Street Partners, LLC, F. Fred Pezeshkan, Iraj Zand, and Raymond Sehayek, Defendants. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
ORDER GRANTING IN PART MOTION FOR
ATTORNEY'S FEES, PARALEGALS' FEES,
THIS PROCEEDING came on for hearing on April 24, 2013, of the Motion for Attorney's Fees, Paralegals' Fees and Costs in Excess of Taxable Costs and memorandum in support thereof (Doc. Nos. 233, 259) (the "Fee Motion") filed by individual Defendants and Counterclaimants, F. Fred Pezeshkan, Iraj Zand, and Raymond Sehayek (collectively, "PZS") and the response filed by Plaintiff and Counterclaim Defendant, Antaramian Properties, LLC ("AP"), and Counterclaim Defendants, Jack J. Antaramian ("Mr. Antaramian"), Antaramian Family, LLC, and the Antaramian Family Trust1 (collectively, with AP, the "Antaramian Parties") (Doc. No. 268) (the "Response"). Subsequent to the oral arguments at the hearing, at the Court's request, the parties filed supplemental memoranda of law (Doc. Nos. 278, 279).
In the Fee Motion, PZS claim that they are the prevailing parties in this adversary proceeding and are entitled to attorney's fees and other fees and non-taxable costs against the Antaramian Parties. The Antaramian Parties contend that PZS are not the prevailing parties and that PZS waived any claim for attorney's fees by failing to properly plead their claim as required by both Florida law and the Federal Rules of Bankruptcy Procedure.
After careful consideration of the legal issues involved, the Court finds:
(a) PZS are the prevailing parties in this adversary proceeding;
(b) PZS properly pleaded their claim for attorney's fees under Florida law and, therefore, did not waive their right to seek attorney's fees;
(c) Rule 7008(b) of the Federal Rules of Bankruptcy Procedure does not apply to the Fee Motion;
(d) PZS are entitled to judgment for their attorney's fees against each of the Antaramian Parties, in an amount to be determined; and
(e) PZS are not entitled to an award of their costs in excess of taxable costs.
On February 13, 2013, shortly after the conclusion of an eight-day trial, the Court orally announced its ruling in this adversary proceeding. The Court entered written Findings of Fact and Conclusions of Law,2 which incorporated the transcript of the Court's oral ruling, and a Final Judgment.3 The Court's Findings of Fact and Conclusions of Law are incorporated herein.
In brief, long standing friends Mr. Antaramian and PZS, through layers of corporate entities, own Basil Street Partners, LLC, the debtor herein (the "Debtor"). The Debtor owned a resort known as Naples Bay Resort. In 2009, the Naples Bay Resort property was subject to a loan held by Regions Bank in the approximate amount of $36,000,000. Mr. Antaramian and PZS had each personally guaranteed the loan, with PZS's guaranties being subject to a $15,000,000 cap (the "Guaranties"). The loan went into default, and Regions Bank commenced a state court foreclosure action, which included claims against Mr. Antaramian and PZS on the Guaranties (the "State Court Action").
As co-defendants in the state court action, Mr. Antaramian and PZS reached an agreement as to how they would negotiate with Regions Bank in an effort to resolve the Guaranties. But contrary to his agreementwith PZS, Mr. Antaramian negotiated on his own behalf with Regions Bank. He arranged for AP to acquire the bank's loan documents and the PZS Guaranties in exchange for a steeply discounted payment of $8,668,000.
AP then continued to prosecute the State Court Action, including the guaranty claims against PZS. PZS defended against AP's guaranty claims and also filed counterclaims against the Antaramian Parties for breach of fiduciary duty, against AP for fraud, and against the other Antaramian Parties for aiding and abetting the alleged fraud.4 The breach of fiduciary duty claims arose from AP's acquisition of the Regions Bank loan documents and the Guaranties. The fraud claim against AP, as Regions Bank's successor-in-interest, arose from the alleged fraudulent conduct of Regions Bank. In addition, PZS asserted that AP's claim against the Debtor was limited to its $8,668,000 cost of acquiring the loan.
While the State Court Action was pending, AP, joined by three other petitioning creditors, filed an involuntary bankruptcy petition against the Debtor.5 The State Court Action was removed, with the consent of all parties, to this Court.6 At the conclusion of the trial, the Court held that Mr. Antaramian and the Antaramian Parties owed fiduciary duties to PZS; that those fiduciary duties had been breached; that PZS's Guaranties were unenforceable; and that AP could enforce the face amount of its claim (which, at that point, with accrued interest totaled almost $53,000,000) against the Debtor. The Court also held that the Antaramian Parties were the alter egos of each other for the purpose of acquiring the Guaranties and subsequently attempting to enforce them against PZS.7 PZS were awarded nominal damages of $1.00 on their breach of fiduciary duty claims. The Court entered judgment for AP and the Antaramian Parties on PZS's fraud claims.
PZS timely filed a Bill of Costs8 and the Fee Motion. In the Fee Motion, PZS seek (i) an award of all of their attorney's fees against the Antaramian Parties, pursuant to the attorney's fee provision in the Guaranties and Fla. Stat. § 57.105(7); and (ii) an award of costs in excess of taxable costs. The costs in excess of taxable costs total $379,206.64, and consist of expert witness fees; attorney and paralegal expenses, including travel and meals; witness travel expenses in excess of taxable costs, including airfare and hotel costs for the parties; attorney pre-trial travel expenses; computerized legal research charges; long distance telephone conference charges; and Federal Express delivery charges.9
The Antaramian Parties oppose the Fee Motion, arguing that PZS were not the prevailing parties in the adversary proceeding, and that, in any event, PZS did not specifically plead a claim for attorney's fees in their answer and counterclaims as required by Florida law and Fed. R. Bankr. P. 7008(b). The Antaramian Parties also argue that because the only basis for awarding the fees is the attorney's fee provision set forth in the Guaranties, and because only AP was a party to the Guaranties, any award of fees can be made against AP alone, and not against the other Antaramian Parties. Lastly, the Antaramian Parties argue that PZS are not entitled to any costs in excess of taxable costs.
Having prevailed on the guaranty-based claims, PZS seek to recover their attorney's fees pursuant to Section 8 of the Guaranties and by operation of Fla. Stat. § 57.105(7).
Section 8 of the Guaranties states in full:
In the event that it be necessary for Bank [i.e., AP as the Bank's successor-in-interest] to enforce any of its rights under the Loan Documents, Guarantor will pay to Bank all costs of collection or enforcement, including reasonable attorneys' fees, paralegals' fees, legal assistants' fees, costs and expenses, whether incurred with respect to collection, litigation, bankruptcy proceedings, interpretation, dispute, negotiation, trial, appeal, defense of actions instituted by a third party against Bank arising out of or related to the Loan, enforcement of any judgment based on this Guaranty, or otherwise, whether or not a suit to collect such amounts or to enforce such rights isbrought or, if brought, is prosecuted to judgment.10
This attorney's fee provision is clearly a unilateral provision in favor of AP. However, under Florida law, any unilateral contractual attorney's fee provision is considered to be reciprocal:
If a contract contains a provision allowing attorney's fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney's fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. . . .11
The parties agree that Florida's body of "prevailing party" case law governs the outcome of this dispute.12 Therefore, the Court must decide whether PZS are the prevailing parties in the adversary proceeding and, if so, against whom PZS may recover their attorney's fees. The Court will address each issue in turn.
PZS and the Antaramian Parties each contend that they are the prevailing parties in this adversary proceeding. This difference of opinion arises because none of the parties prevailed on every one of its claims. However, under Florida law, the prevailing party for purposes of attorney's fees is the party that prevailed on the significant issues in the litigation.13 AP argues that its guaranty claims against PZS were not the most significant issues in the litigation. Rather, AP contends that Counts I, II, and III of its Amended Complaint (in which it sought to enforce the loan documents against the Debtor) encompassed the most significant issues of the litigation. AP argues that because it prevailed on those counts and received a judgment for nearly $53 million against the Debtor, it is the prevailing party in the litigation as a whole.14
But AP overlooks the fact that PZS were not parties to Counts I, II or III of AP's Amended Complaint. In fact, AP could have prosecuted two separate lawsuits, one against the Debtor to enforce the loan obligations and a second lawsuit against PZS to recover on the Guaranties. The fact that AP prevailed on its claims against the Debtor does not mean that AP was also the prevailing party as against PZS. Just because AP...
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