In re John Richards Homes Bldg. Co., Case No. 02-54689-R

• Docket Number: Case No. 02-54689-R
• Decision Date: 27 October 2011
• Parties: In re: John Richards Homes Building Co., L.L.C., Debtor.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Michigan

In re: John Richards Homes Building Co., L.L.C., Debtor.

Case No. 02-54689-R

United States Bankruptcy Court Eastern District of Michigan Southern Division

Dated: October 27, 2011

Opinion and Order Regarding:
Application of Honigman Miller Schwartz and Cohn for Second Award of Attorney Fees and Expenses, and Supplement
and
JRH's Motion for Assessment of Additional Punitive Damages Based on Post-Award Conduct
I. Introduction

A. The Fee Application and Supplement

Upon remand from the district court, this matter is again before the Court on the "Application of Honigman Miller Schwartz and Cohn for Second Award of Attorney Fees and Expenses." The Honigman firm represented the alleged debtor, John Richards Homes Bldg. Co., L.L.C., ("JRH") throughout this failed involuntary bankruptcy proceeding that the petitioning creditor, Kevin Adell, filed. The dismissal of the petition ultimately resulted in a judgment under 11 U.S.C. § 303(i) against Adell and in favor of JRH in the amount of $6.4 million. See In re John Richards Homes Bldg. Co., L.L.C., 291 B.R. 727 (Bankr. E.D. Mich. 2003). The Honigman firm also represented JRH in Adell's several appeals from the judgment, as well as in attempting to collect on the judgment and in Adell's own failed bankruptcy in Florida.

The fee application seeks an award against Adell for fees of $1,500,919.75 and expenses of

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$212,054.29. Initially, the Court denied the application on the grounds that 11 U.S.C. § 303(i)(1) does not allow an award of attorney fees for services provided after the judgment awarding damages under § 303(i), such as the application sought. See In re John Richards Homes Bldg. Co. L.L.C., 2006 WL 3228523 (Bankr. E.D. Mich. 2006).

The district court vacated that order and remanded the matter. See Honigman Miller Schwartz & Cohn. L.L.P. v. Adell (In re John Richards Homes Bldg. Co., L.L.C.), 405 B.R. 192 (E.D. Mich. 2009).

Following the remand, the Honigman firm filed a supplement to the application seeking additional fees of $279,465.21, plus $39,273.91 in expenses.

Accordingly, the total now sought is $2,031,713.16.

For the reasons stated herein the applicant is allowed attorney fees and costs in the reduced amount of $1,854,192.73.

B. The Motion for Additional Punitive Damages

Also before the Court on remand is JRH's "Motion for Assessment of Additional Punitive Damages Based on Post-Award Conduct." This Court had denied this motion on the grounds that the § 303(i) judgment was not a court order and that therefore Adell's actions in avoiding the judgment were not sanctionable as violations of a court order. In re John Richards Homes Bldg. Co., L.L.C., 2006 WL 3230009 (Bankr. E.D. Mich. 2006).

The district court also vacated that order and remanded the matter. John Richards Homes Bldg. Co., L.L.C. v. Adell (In re John Richards Homes Bldg. Co., L.L.C.), 404 B.R. 220 (E.D. Mich. 2009).

Upon remand, the Court conducted an evidentiary hearing. For the reasons stated herein,

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the Court now concludes that the motion should be granted and that a sanction of $2,800,000.00 should be awarded against Adell in favor of JRH.

II. The Procedural History of the Case

The procedural history of this case is overwhelming. Fortunately, it is unnecessary to review it in detail here. That history is well reviewed in the following thirty-one published and unpublished decisions from the bankruptcy courts, district courts and courts of appeals serving Michigan and Florida, as well as the United States Supreme Court:

1. In re John Richards Homes Bldg. Co., L.L.C., 291 B.R. 727 (Bankr. E.D. Mich. April 25, 2003) (awarding JRH $4.1 million in compensatory damages, $2 million in punitive damages, and over $300,000 in attorney fees under 11 U.S.C. § 303(i), following the dismissal of Adell's involuntary petition against it).

2. In re John Richards Homes Bldg. Co., L.L.C., 298 B.R. 591 (Bankr. E.D. Mich. September 17, 2003) (disallowing Adell's claim of exemption in his recently purchased homestead in Florida on the grounds that the exemption under Florida law was preempted by § 303(i) and that Adell was not a resident of Florida; also finding that Adell Broadcasting and STN.com participated in a scheme to evade the judgment and that the scheme included filing false garnishee disclosures).

3. In re Adell, 2004 WL 1243396 (Bankr. M.D. Fla. March 9, 2004) (denying as moot Adell's motion to strike JRH's objection to his motion for abstention and remand of Whall Group adversary proceeding).

4. In re Adell, 310 B.R. 460 (Bankr. M.D. Fla. May 28, 2004) (denying JRH's motion to dismiss Adell's chapter 11 case, but holding that the case would be dismissed if Adell's third

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amended plan were not confirmed).

5. Adell v. John Richards Homes Bldg. Co., L.L.C. (In re John Richards Homes Bldg. Co., L.L.C.), 312 B.R. 849 (E.D. Mich. August 5, 2004) (affirming the order of April 25, 2003, awarding JRH compensatory damages, punitive damages and attorney fees against Adell).

6. John Richards Homes Bldg. Co., L.L.C. v. STN.com (In re John Richards Homes Bldg. Co., L.L.C.) 320 B.R. 138 (E.D. Mich. August 5, 2004) (denying the motion of garnishee defendants Adell Broadcasting Co. and STN.com to withdraw the reference on JRH's claims against them).

7. In re Adell, 2004 WL 2931393 (Bankr. M.D. Fla. October 1, 2004) (allowing JRH's claim in the amount of $2,800,000 as secured and $3,660,466.68 as unsecured).

8. In re Adell, 2004 WL 2931390 (Bankr. M.D. Fla. October 15, 2004) (denying JRH's motion for relief from the stay to permit it to pursue claims against garnishee defendants STN.com and Adell Broadcasting Corp.).

9. Adell v. John Richards Homes Bldg. Co., L.L.C. (In re John Richards Homes Bldg. Co., L.L.C.), 320 B.R. 139 (E.D. Mich. January 31, 2005) (denying Adell's motion for stay of the damages judgment pending appeal to the court of appeals).

10. In re Adell, 321 B.R. 562 (Bankr. M.D. Fla. January 31, 2005) (allowing Adell's homestead exemption in his Florida home).

11. In re Adell, 321 B.R. 573 (Bankr. M.D. Fla. February 1, 2005) (avoiding JRH's lien on Adell's home because it impaired his homestead exemption under Florida law).

12. In re Adell, 325 B.R. 883 (Bankr. M.D. Fla. March 22, 2005) (granting Adell's motion for reconsideration of the order of May 28, 2004, and allowing a further opportunity to file another amended plan).

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13. In re Adell, 328 B.R. 845 (Bankr. M.D. Fla. June 21, 2005) (following the district court's reversal of the order denying JRH's motion to dismiss Adell's chapter 11 case, granting Adell's motion for sanctions against JRH for violation of the automatic stay).

14. In re Adell, 328 B.R. 850 (Bankr. M.D. Fla. July 11, 2005) (denying JRH's renewed motion for relief from the stay to permit it to pursue claims against garnishee defendants STN.com and Adell Broadcasting Corp.).

15. In re Adell, 332 B.R. 844 (Bankr. M.D. Fla. October 4, 2005) (granting JRH's motion to dismiss Adell's chapter 7 case).

16. In re Adell, 343 B.R. 717 (Bankr. M.D. Fla. February 14, 2006) (denying Adell's motion to reconsider the order dismissing his chapter 7 case).

17. Adell v. John Richards Homes Bldg. Co., L.L.C. (In re John Richards Homes Bldg. Co., L.L.C.), 439 F.3d 248 (6th Cir. March 1, 2006) (affirming the district court's August 5, 2004 order affirming the award of compensatory damages, punitive damages and attorney fees).

18. In re John Richards Homes Bldg. Co., LLC, 346 B.R. 762 (Bankr. E.D. Mich. August 8, 2006) (denying JRH's motions for judgment against garnishee defendants STN.com and Adell Broadcasting Corp. because Adell had paid JRH's judgment against him in full).

19. In re John Richards Homes Bldg. Co., L.L.C., 2006 WL 3230009 (Bankr. E.D. Mich. September 21, 2006) (denying JRH's motion for additional punitive damages).

20. In re John Richards Homes Bldg. Co., L.L.C., 2006 WL 3228523 (Bankr. E.D. Mich. September 21, 2006) (denying Honigman Miller Schwartz & Cohn's second application for fees and expenses).

21. Adell v. John Richards Homes Bldg. Co., L.L.C., 549 U.S. 818, 127 S. Ct. 85 (October

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2, 2006) (denying Adell's petition for cert. from the Sixth Circuit's affirmance of March 1, 2006).

22. John Richards Homes Bldg. Co., L.L.C. v. Adell (In re Adell), 2006 WL 3827438 (M.D. Fla. December 27, 2006) (remanding JRH's motion for sanctions against Adell).

23. John Richards Homes Bldg. Co., L.L.C. v. Adell (In re Adell), 2008 WL 746833 (M.D. Fla. March 18, 2008) (affirming the denial of JRH's motion for sanctions against Adell).

24. John Richards Homes Bldg. Co., L.L.C. v. Adell (In re Adell), 296 Fed. App'x 837 (11th Cir. October 17, 2008) (affirming the district court's March 18, 2008 order...