In re Frazin
| Decision Date | 07 April 2009 |
| Docket Number | Bankruptcy No. 02-32351-bjh-13.,Adversary No. 08-3021-bjh. |
| Citation | 413 B.R. 378 |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
| Parties | In re Timothy Michael FRAZIN, Debtor. Timothy Michael Frazin, Plaintiff, v. Haynes and Boone, LLP, Griffith & Nixon, P.C., Scott Griffith, Nina Cortell, and Warren Dodson, Defendants. |
Joseph D. Martinec, Martinec Winn Vickers & McElroy, PC, Austin, TX, Robert M. Nicoud, Jr., Olson, Nicoud & Gueck, LLP, Dallas, TX, for Plaintiff.
Scott W. Everett, Haynes & Boone, LLP, Dallas, TX, for Haynes and Boone, LLP.
Anthony P. Jach, Griffith Nixon & Davison, P.C., William Chris Wolffarth, Shackelford Melton & McKinley, Dallas, TX, for Griffith & Nixon, P.C., Scott Griffith.
Nina Cortell, pro se.
Warren D. Dodson, pro se.
On November 3, 2008, Haynes and Boone, LLP ("Haynes and Boone") filed a Motion for Attorneys' Fees and Expenses and Brief in Support (the "H & B Motion").1 On November 4, 2008, Griffith & Nixon, P.C. ("G & N") filed a Motion for Attorneys' Fees and Expenses and Brief in Support (Docket No. 137) (the "G & N Motion") (the H & B Motion and the G & N Motion will be referred to collectively as the "Motions").2 Timothy Michael Frazin ("Frazin" or "Debtor") filed opposition to the Motions on November 17, 2008,3 and replies were filed on November 24, 2008, following which the Court took the Motions under advisement.
The Motions follow trial of an adversary proceeding in which Frazin sued Haynes and Boone, Nina Cortell ("Cortell"), and Warren Dodson ("Dodson") (collectively, the "H & B Defendants") and defendants G & N and Scott Griffith ("Griffith") (collectively, the "G & N Defendants") (the H & B Defendants and the G & N Defendants will be referred to collectively as the "Defendants") for negligence, misrepresentation/deceptive trade practices, and breach of fiduciary duty in connection with their representation of the Debtor as special trial and/or appellate counsel (collectively, the "Malpractice Claims"). The Defendants disputed the validity of the Malpractice Claims and sought the final allowance under 11 U.S.C. § 330 of the contingency fees and expenses provided for in their respective retention and fee agreements with the Debtor. The Defendants by way of counterclaims, also sought to recover the fees and expenses they have incurred in defending themselves and their fee applications in accordance with (1) Section 38.001 of the Texas Civil Practice and Remedies Code, see Tex. Civ. Prac. & Rem.Code § 38.001 (Vernon 2008) ("Section 38.001"), (2) Section 17.50(c) of the Texas Deceptive Trade Practices-Consumer Protection Act, see Tex. Bus. & Comm. Code § 17.50(c) (Vernon 2002 & Supp. 2008) (the "DTPA"), and (3) this Court's General Order 00-7 ("Standing Order Concerning Guidelines for Compensation and Expense Reimbursement of Professionals" —the "Standing Order") and 11 U.S.C. § 330.4
The Court has core jurisdiction over the Motions pursuant to 28 U.S.C. §§ 1334 and 157(b). Pursuant to Federal Rule of Civil Procedure 52 and Federal Rule of Bankruptcy Procedure 7052, this Memorandum Opinion and Order contains the Court's findings of fact and conclusions of law.
The factual background underlying this Adversary Proceeding is set forth in the Court's prior Memorandum Opinion entered September 23, 2008 (the "September Memorandum Opinion"), and will not be repeated in its entirety here. However, a truncated version follows.
On March 18, 2002, the Debtor filed his voluntary petition under Chapter 13 of the Bankruptcy Code. In his bankruptcy schedules, the Debtor represented that he held a claim against Lamajak, Inc. ("Lamajak") worth $6,000,000.00. During the pendency of his bankruptcy case, the Debtor was involved in litigation with Lamajak styled Tim Frazin v. Lamajak, Inc., 192nd District Court, Dallas County, Texas, Case No. 03-5672-K (the "State Court Action"). In connection with the State Court Action, the Debtor, with this Court's approval, hired G & N as his special counsel to pursue the litigation pursuant to 11 U.S.C. § 327(e) on a contingency fee arrangement.
Pursuant to the terms of his confirmed Chapter 13 Plan, the Debtor was to use a portion of the proceeds from any recovery in the State Court Action (the "Litigation Proceeds") to satisfy claims in his bankruptcy case. On April 18, 2005, the Court entered its Order Discharging Debtor After Completion of Chapter 13 Plan. The bankruptcy case remained open to allow for the possibility of additional distributions to unsecured creditors pursuant to the Chapter 13 Plan in the event the Debtor recovered damages in the State Court Action. On June 13, 2005, a final judgment (the "Final Judgment") was entered in the State Court Action in favor of the Debtor, and the Debtor was awarded certain damages. Lamajak subsequently appealed the Final Judgment.
The Debtor, G & N, and Haynes and Boone thereafter signed an engagement letter pursuant to which Haynes and Boone was retained as special counsel to represent the Debtor in connection with Lamajak's challenge to the Final Judgment in the State Court Action, and on December 19, 2005, the Court entered its Order: (A) Approving Employment of Haynes and Boone, LLP as Special Appellate Counsel and (B) Regarding Disbursement of Anticipated Proceeds from Litigation (the "Litigation Proceeds Order"). See Docket No. 100 in Case. No. 02-32351. Pursuant to the Litigation Proceeds Order, the Court approved the retention of Haynes and Boone and ordered that the firm's fees would be payable on the filing of a fee application and approval by the Court. Id.5
G & N represented the Debtor in the State Court Action. The Debtor's position at trial was that he had an oral agreement with Lamajak, based upon a January, 1998 conversation with Michael Cohen ("Cohen"), Lamajak's president, under which he was to provide certain services to Lamajak in an effort to maximize Lamajak's profits from the sale of Beanie Babies, in return for which Lamajak would pay him all gross profits in excess of $6,000,000.00 that were earned by Lamajak from the sale of Beanie Babies. At trial, Cohen denied the existence of the claimed oral agreement. The State Court Action was hotly contested. After trial, the jury awarded the Debtor judgment on three alternative theories of recovery: (1) breach of contract; (2) promissory estoppel; and (3) quantum meruit. The Final Judgment provided recovery on the breach of oral contract claim ($4,000,000 for damages, $1,600,000 for trial attorneys' fees and $50,000 for appellate fees), and $1,508,383.10 in prejudgment interest.6 Id.
On appeal, Lamajak contended that Frazin was not entitled to recover on any of his theories. With some assistance from G & N, Haynes and Boone represented Frazin on appeal. On July 6, 2007, the appellate court issued an opinion reversing and rendering in part and affirming in part the trial court judgment (Lamajak, Inc. v. Frazin, 230 S.W.3d 786 (Tex.App.-Dallas 2007)).7 The appellate court set aside the contract award for lack of evidence, found that Frazin could not personally recover promissory estoppel reliance damages incurred by his company, and reduced the prejudgment interest award, but awarded Frazin recovery on his quantum meruit claim, attorneys' fees and pre- and post-judgment interest, for a total recovery of approximately $3.4 million. Id. Lamajak sought a rehearing, which was denied. Thereafter, Lamajak began the process of seeking review in the Texas Supreme Court, but pending further review by the Texas Supreme Court, the parties agreed to settle the approximate $3.4 million appellate judgment for $3.2 million. Frazin executed a formal settlement agreement and release with Lamajak.
G & N did not receive or distribute the settlement proceeds. Rather, under the Litigation Proceeds Order, Lamajak wired the funds into Haynes and Boone's trust account and Haynes and Boone notified the Chapter 13 Trustee and the Debtor's bankruptcy counsel, Rosemary Zyne ("Zyne"), of the receipt of the Litigation Proceeds.
On November 19, 2007, Haynes and Boone filed a Motion for Order in Furtherance of the Distribution of Lamajak Litigation Proceeds (the "Distribution Motion"), seeking further guidance from this Court regarding disbursements of the Litigation Proceeds upon the Court's approval of the Settlement Agreement. In the Distribution Motion (¶ 13), Haynes and Boone noted that it would file an application for approval of its fees. On November 19, 2007, Haynes and Boone also filed a request for an expedited hearing on the Distribution Motion. The Court denied the request to set the Distribution Motion for hearing on an expedited basis, and it was set for hearing on December 27, 2007.
Haynes and Boone and G & N filed their respective applications requesting approval of fees pursuant to their contingency fee arrangement with the Debtor, which were also set for hearing on December 27, 2007.
On November 30, 2007, Zyne filed, on Frazin's behalf, a motion to approve the Lamajak settlement (the "Settlement Motion"). The Settlement Motion was set for hearing on December 27, 2007.8 On December 20, 2007, through his then-attorney, Gary Schepps ("Schepps"), the Debtor filed an objection to the fee application of Haynes and Boone and a motion to continue the hearing on both fee applications. The Debtor filed an objection to the G & N fee application on December 26, 2007, also through his attorney, Schepps. On December 27, 2007, this Court, Judge Hale presiding, held a hearing on the Distribution Motion. Prior to the hearing, the parties agreed to continue the hearing on the fee applications to February 4, 2008, when the undersigned could hear them. At...
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In re Pastran
...“is so venerable and ubiquitous in American courts it is known as the ‘American Rule’ ”. Frazin v. Haynes & Boone, LLP (In re Frazin), 413 B.R. 378, 400 (Bankr.N.D.Tex.2009) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex.2006)); see also Crenshaw v. Gen. Dynamics Co......
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In re Pastran
...This rule "is so venerable and ubiquitous in American courts it is known as the 'American Rule'". Franzin v. Haynes & Boone, LLP (In re Franzin) , 413 B.R. 378, 400 (Bankr. N.D. Tex. 2009) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006)); see also Crenshaw v. ......
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In re Texans CUSO Ins. Group, LLC
...by any other witness, or attendant circumstances" and is clear, direct and positive, and free from contradiction. In re Frazin, 413 B.R. 378, 415 (Bankr. N.D.Tex.2009) (citing McGalliard v. Kuhlmann, 722 S.W.2d 694 (Tex.1986) and quoting Ragsdale v. Progressive Voters League, 801 S.W.2d 880......
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In re Pastran
..."is so venerable and ubiquitous in American courts it is known as the 'American Rule'". Franzin v. Haynes & Boone, LLP (In re Franzin), 413 B.R. 378, 400 (Bankr. N.D. Tex. 2009) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006)); see also Crenshaw v. Gen. Dynami......
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Private sector business records
...of the sale and assignment of a cardholder’s account, all fell under the hearsay exception for business records. 26 In re Frazin , 413 B.R. 378 (Bkrtcy., N.D.Tex., 2009). In a Chapter 13 proceeding, the debtor filed an adversary proceeding against various law firms alleging negligence, misr......
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Private Sector Business Records
...of the sale and assignment of a cardholder’s account, all fell under the hearsay exception for business records. 26 In re Frazin , 413 B.R. 378 (Bkrtcy., N.D.Tex., 2009). In a Chapter 13 proceeding, the debtor filed an adversary proceeding against various law firms alleging negligence, misr......
-
Private Sector Business Records
...of the sale and assignment of a cardholder’s account, all fell under the hearsay exception for business records. 26 In re Frazin , 413 B.R. 378 (Bkrtcy., N.D.Tex., 2009). In a Chapter 13 proceeding, the debtor filed an adversary proceeding against various law firms alleging negligence, misr......
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Private Sector Business Records
...immune from exclusion; like other records, a proper foundation must be laid before they can be admitted as evidence. 29 26 In re Frazin , 413 B.R. 378 (Bkrtcy., N.D.Tex., 2009). In a Chapter 13 proceeding, the debtor filed an adversary proceeding against various law firms alleging negligenc......