Holber v. Suffolk Constr. Co. (In re Red Rock Servs. Co.)

• Decision Date: 02 January 2013
• Docket Number: Adversary No. 09–2112.,Bankruptcy No. 07–21572REF.
• Citation: 484 B.R. 67
• Parties: In re RED ROCK SERVICES CO., LLC, Debtor. Robert H. Holber, Chapter 7 Trustee of Red Rock Services Co., LLC, Plaintiff v. Suffolk Construction Company, Inc., Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

484 B.R. 67

In re RED ROCK SERVICES CO., LLC, Debtor.Robert H. Holber, Chapter 7 Trustee of Red Rock Services Co., LLC, Plaintiff

v.Suffolk Construction Company, Inc., Defendant.

Bankruptcy No. 07–21572REF.

Adversary No. 09–2112.

United States Bankruptcy Court,

E.D. Pennsylvania.

Jan. 2, 2013.

Aviva Wein, David R. King, Herrick Feinstein LLP, Princeton, NJ, Howard Gershman, Gershman Law Offices, PC, Jenkintown, PA, William Robert Fried, Herrick Feinstein, LLP, New York, NY, for Plaintiff.

Christin E. Deacon, McElroy Deutsch Mulvaney & Carpenter, Philadelphia, PA, Damon M. Seligson, John W. DiNicola, II, DiNicola, Seligson & Upton, LLP, Boston, MA, Scott Aaron Levin, McElroy Deutsch Mulvaney & Capenter LLP, Morristown, NJ, for Defendant.

MEMORANDUM OPINION

RICHARD E. FEHLING, Bankruptcy Judge.

The Chapter 7 Trustee (“Trustee”) of the bankruptcy estate of Debtor, Red Rock Services Co., LLC (“Red Rock”), initiated this adversary proceeding to collect $1,667,945, plus attorneys' fees, costs and interest, from Suffolk Construction Company, Inc. (“Suffolk”). Trustee alleged that Suffolk refused or failed to pay Red Rock for certain demolition services provided to Suffolk on a construction project, known as the Silo Point project, near Baltimore, Maryland. Suffolk's answer to Trustee's second amended complaint set forth several affirmative defenses, including a setoff defense arising from Red Rock's failure to perform its obligations on a second construction project, known as the McCormack project, in Boston, Massachusetts. Suffolk's answer also requested attorneys' fees, costs and interest.

After an eight day trial and the parties' submission of post-trial proposed and reply findings of fact and proposed and reply conclusions of law, I entered a Memorandum Opinion on August 30, 2012 finding that: (1) Suffolk owed Trustee $1,156,909.46 on the Silo Point project; and (2) Red Rock owed Suffolk $852,201.83 on the McCormack project.¹ I also found that Suffolk may offset the amounts it owes Trustee and reduce its obligation to Trustee to $304,707.63. I did not rule on the parties' requests for attorneys' fees and costs, however, because neither party had filed a pleading that properly put the issue of attorneys' fees and costs before me.² I gave the parties until September 21, 2012, to file appropriate pleadings asserting their rights to recover attorneys' fees and costs.³ I also deferred entry of final judgment in this adversary proceeding until the attorneys' fees and costs issues were resolved.

Both Trustee and Suffolk filed their respective requests for attorneys' fees and costs and their briefs in support thereof on October 10, 2012.⁴ Each party filed a brief in opposition to the other's fees and costs. I held argument on the fees and costs on November 19, 2012, and the matter is ready for disposition. This Memorandum Opinion constitutes my findings of fact and conclusions of law in this aspect of the dispute.

Both Trustee and Suffolk base their request for attorneys' fees and costs upon the prevailing party provisions contained in the Silo Point and McCormack subcontracts executed between them. Trustee bases his attorneys' fees and costs request upon paragraph 8.16 of the Silo Point subcontract, see Joint Exhibit J–2 at p. 11, ¶ 8.16, while Suffolk bases its attorneys' fees and costs request upon paragraph 8.16 of the McCormack subcontract, see Joint Exhibit J–44 at p. 14, ¶ 8.16. Both paragraphs are identical and state:

The prevailing party in any dispute shall be entitled to its reasonable attorneys' fees, expert consultation fees and costs incurred in the course of such dispute from the date of a request for mediation through conclusion by trial or arbitration, including any appeals.

Because I found that Suffolk owed Trustee $1,156,909.46 on the Silo Point project, I conclude that Trustee is the prevailing party on the dispute between the parties under the Silo Point subcontract. Trustee is therefore entitled to attorneys' fees and costs under paragraph 8.16 of the Silo Point subcontract. See Congressional Hotel Corp. v. Mervis Diamond Corp., 200 Md.App. 489, 28 A.3d 75, 81 n. 3 (201l) (“In the context of an award of attorney's fees, a litigant is a ‘prevailing party’ if he succeeds ‘on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.’ ” Royal Inv. Group, LLC v. Wang, 183 Md.App. 406, 961 A.2d 665, 695 (2008) quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)).

Likewise, because I found that Red Rock owed Suffolk $852,201.83 on the McCormack project, I conclude that Suffolk is the prevailing party on the dispute between the parties under the McCormack subcontract. Suffolk is therefore entitled to attorneys' fees and costs under paragraph 8.16 of the McCormack subcontract. See Northern Assocs., Inc. v. Kiley, 57 Mass.App.Ct. 874, 787 N.E.2d 1078, 1083–85 (2003) (for purposes of determining whether a party is a “prevailing party” under the terms of a contract provision awarding attorneys' fees to the “prevailing party”, court finds that one or both parties may “prevail” in the enforcement of rights or remedies under a contract); Bardon Trimount, Inc. v. Guyott, 49 Mass.App.Ct. 764, 732 N.E.2d 916, 927 (2000) (prevailing party is party in whose favor judgment is entered).

As a preliminary matter, Suffolk argues that even as a prevailing party, Trustee is limited in his collection of attorneys' fees to the contingent fee arrangement originally proposed by Trustee and his special counsel in Trustee's Application to Employ Herrick, Feinstein, LLP as Special Litigation Counsel Pursuant to 11 U.S.C. § 327 filed on March 6, 2009. I explained in my July 18, 2012 Memorandum Order Denying Trustee's Application To Modify Terms of Retention of Herrick Feinstein, L.P., however, that neither my March 19, 2009 Order approving Herrick Feinstein's employment as special counsel to litigate the Silo Point dispute nor my March 23, 2010 Order approving Herrick Feinstein's employment as special counsel to litigate the McCormack dispute referred to, adopted, or approved the contingent fee arrangement. No approved contingent fee arrangement existed; none therefore was being modified. Zolfo, Cooper & Co. v. Sunbeam–Oster, Inc., 50 F.3d 253, 261 (3d Cir.1995) quoting and adopting In re C & P Auto Transport, Inc., 94 B.R. 682, 685 n. 4 (Bankr.E.D.Cal.1988). As such, Herrick, Feinstein's fee is not limited by the original contingent fee arrangement and may be determined by the lodestar analysis. I find under the circumstances of this case that the underlying litigation was factually and legally complex as well as extremely time consuming,⁵ and Herrick Feinstein should therefore be compensated based upon the lodestar approach.

Both Trustee and Suffolk argue that the attorneys' fees requested by their opponent are not reasonable. Neither party, however, presented any evidence during the November 19, 2012 hearing that was scheduled to be held on the parties' attorneys' fees submissions. I heard no evidence from either party about rates, number of hours, lack of necessity for taking certain actions, or any other aspect of their fee applications. Instead, only oral argument was taken. As a result, no record was made concerning the unreasonableness of either party's attorneys' fee request. I therefore reject both parties' arguments attacking the reasonableness of their opponent's attorneys' fee request and find that neither Trustee nor Suffolk established the unreasonableness of any fees.⁶

I therefore find that the attorneys' fees and costs requested by both Trustee and Suffolk are reasonable, given the factual and legal complexities of this case, the high level of skill required to try this case properly and efficiently, the amounts involved in this dispute, and the great amount of time required to litigate this case to its present posture.⁷ The parties' submissions for their fees and costs shall therefore be approved as filed.⁸

An appropriate Order follows.

ORDER

AND NOW, this 2 day...