In re Robby's Pancake House of Florida, Inc.
| Decision Date | 04 November 1982 |
| Docket Number | Adv. No. 3-81-0824.,Bankruptcy No. 3-81-01326 |
| Citation | 24 BR 989 |
| Parties | In re ROBBY'S PANCAKE HOUSE OF FLORIDA, INC., Debtor. ROBBY'S PANCAKE HOUSE OF FLORIDA, INC., Plaintiff, v. R.K. WALKER, d/b/a Walker Construction Company; Warren Brothers, a Division of Ashland Oil, Inc.; Ward S. Whelchel; H. David Cate; The United States of America; Metro Painting Co., Inc.; Acoustics, Inc.; Viking Equipment Company; C T Construction Company and Universal Modular Ind., Inc. (James L. Clayton, Trustee); Mizell Brothers Company; Jim Lifford Lumber Company; Standard Glass and Supply Company; David L. Sheley and wife, Barbara Sheley; Powell-Newman, Inc.; Jack W. Bowers, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Tennessee |
Erma G. Greenwood, Kramer, Johnson, Rayson, McVeigh & Leake, Knoxville, Tenn., for plaintiff.
Ward S. Whelchel, Gillenwater, Whelchel & Nichol, Knoxville, Tenn., pro se and for R.K. Walker, d/b/a Walker Const. Co., and for H. David Cate.
K. Karl Spalvins, Knoxville, Tenn., for Warren Brothers, A Division of Ashland Oil, Inc.
Robert E. Simpson, Knoxville, Tenn., for the United States of America.
Doris C. Allen, Bernstein, Susano, Stair & Cohen, Knoxville, Tenn., for Universal Modular Ind., Inc.; Mizell Brothers Co.; David L. Sheley and wife, Barbara Sheley.
Douglas L. Dutton, Hodges, Doughty & Carson, Knoxville, Tenn., for Metro Painting Co., Inc.
John H. Fowler, Fowler & Rowntree, Knoxville, Tenn., for Acoustics, Inc.
R. Thomas Stinnett, Steven D. Lipsey, Stone & Hinds, Knoxville, Tenn., for Standard Glass and Supply Co.
Jack W. Bowers, pro se.
Mary Beth Leibowitz, Knoxville, Tenn., for Powell-Newman, Inc.
The task before the court is to determine the relative priorities among fifteen parties to the proceeds of a judgment entered against the Chapter 11 debtor, Robby's Pancake House of Florida, Inc., prior to the filing of the debtor's bankruptcy petition. The common denominator of the claimants is that each is a creditor of R.K. Walker, who holds an unsatisfied judgment in the principal amount of $91,537.60 against Robby's.1 This judgment was entered on February 4, 1981, by the Knox County Circuit Court. The report of a Special Master, H. David Cate, was confirmed and incorporated by reference in the circuit court judgment. Unfortunately, the claims of R.K. Walker's creditors asserted herein substantially exceed the amount of the circuit court judgment and consequently must be ranked.
On June 25, 1981, Robby's Pancake House of Florida, Inc. filed a complaint in the Knox County Chancery Court. Robby's named fifteen defendants as claimants to the Walker judgment proceeds and requested a declaratory judgment determining the rights of the parties and a restraining order staying any further collection action by the defendants. Thereafter, on August 24, 1981, Robby's filed a voluntary Chapter 11 bankruptcy petition. A petition to remove the declaratory judgment action which had been commenced by Robby's was filed by R.K. Walker on September 28, 1981. The case was removed to this court pursuant to the provisions of 28 U.S.C.A. § 1478(a) (Supp.1982).
The claimants and the basis of their respective claims are identified in the following table in the sequence of discussion in section III of this opinion:
CLAIMANT ALLEGED BASIS FOR CLAIM
Ward S. Whelchel Statutory Attorney's Lien
(Tenn. Code Ann. § 23-2-102
(1980))
H. David Cate Special Master's Fee
(Tenn. Code Ann. § 20-12-119
(1980))
Jack W. Bowers Statutory Attorney's Lien
(Tenn. Code Ann. § 23-2-102
(1980))
Robby's Pancake House Costs and attorney fees connected
of Florida, Inc. with this declaratory action
Internal Revenue Service a) Notice of Federal Tax Liens
(five in number) (26 U.S.C.A
§§ 6321, 6323 (1967))
b) Notice of Levy (two in number)
(26 U.S.C.A. § 6331 (1967))
Metro Painting Company, a) Agreed Final Judgment
Inc. b) Garnishment Lien (Tenn. Code
Ann. § 26-2-202 (1980))
Acoustics, Inc. Garnishment Lien (Tenn. Code
Ann. § 26-2-202 (1980))
Mizell Brothers Company Garnishment Lien (Tenn. Code
Ann. § 26-2-202 (1980))
Universal Modular Garnishment Lien (Tenn. Code
Industries, Inc. Ann. § 26-2-202 (1980))
Warren Brothers Judgment Lien
Company, Inc
Powell-Newman, Inc. Garnishment Lien (Tenn. Code
Ann. § 26-2-202 (1980))
Standard Glass and Assignment
Supply Company
David Sheley and Subrogation to rights of
Barbara Sheley Standard Glass
R.K. Walker Rights to any surplus after
payment of valid claims
* Jim Lifford Lumber ____
Company
* Viking Equipment ____
Company
III
On December 20, 1977, Ward S. Whelchel filed a complaint on behalf of R.K. Walker, d/b/a Walker Construction Company, against Robby's Pancake House of Florida, Inc. wherein damages were requested for breach of contract. A judgment was entered on October 31, 1978, in favor of Walker by the Knox County Circuit Court. That judgment was appealed by Robby's and the case was remanded to the circuit court with directions to redetermine the amount of damages which Walker was entitled to recover from Robby's. In accordance with the suggestion of the court of appeals, the circuit court appointed a Special Master, H. David Cate, to adjudicate the amount of damages. His findings were confirmed and incorporated by reference in the February 4, 1981, judgment of the circuit court. Under the terms of that judgment, R.K. Walker was awarded judgment in the amount of $91,537.60 against Robby's (Tr. Exh. 6).
The terms of the February 4, 1981, circuit court judgment also provide that: (1) Ward S. Whelchel is entitled to an attorney fee for services to date in the amount of $34,937.78 and a lien for attorney fees and expenses is impressed upon the proceeds of the judgment; (2) H. David Cate, Special Master, is awarded a fee of $10,000.00, which is to be borne equally by Walker and Robby's. A lien is also impressed upon the proceeds of the judgment for the satisfaction of the Special Master's fee.2
It is Whelchel's position that he is entitled to an attorney's lien in the amount of $39,293.78,3 as of November 20, 1981, by virtue of the provisions of Tenn.Code Ann. § 23-2-102 (1980), which provides that: "Attorneys and solicitors of record who begin a suit shall have a lien upon the plaintiff's or complainant's right of action from the date of the filing of the suit." Whelchel contends that his claim is superior to the interests of all of the other parties in this action.
It is suggested by Cate that his fee award as Special Master, which was granted by the circuit court judge, is a fee within the discretion of the trial judge authorized by Tenn.Code Ann. § 20-12-119 (1980), which states:
Discretion of judge.— (a) In all civil cases, whether tried by a jury or before the court without a jury, the presiding judge shall have a right to adjudge the cost. (b) In doing so, he shall be authorized, in his discretion, to apportion the cost between the litigants, as in his opinion the equities of the case demand.
Cate further suggests that his fee as Special Master should be considered a cost of administration and that his claim has a priority equal to that of a statutory attorney's lien.
Jack W. Bowers has a claim against R.K. Walker in the amount of $1,712.50. This claim was reduced to judgment on February 16, 1978, in the Knox County General Sessions Court. Bowers states that the judgment amount represents the sum owed to him by Walker for attorney fees for services in connection with Walker's breach of contract suit against Robby's. Bowers asserts that he is also entitled to an attorney's lien and that his claim is entitled to a priority equal with the claim of Whelchel and Cate and superior to the claims of the remaining parties.
The final claim among this group is that of Robby's for its costs and attorney fees for this declaratory action. It is Robby's contention that the instant declaratory action is for the mutual benefit of R.K. Walker, the creditors named herein, and Robby's itself.
Several of the parties have conceded the priority of Whelchel and Cate. The court concurs in this concession and finds that Whelchel and Cate are entitled to first priority in the distribution of the judgment proceeds, subject only to the deduction of the sum of Robby's costs herein plus the amount of a reasonable fee for its attorney for services directly related to this declaratory action.
Whelchel's answer reflects that the amount of his claim secured by an attorney's lien has increased from $34,937.78, as stated in the February 4, 1981 judgment, to $39,293.78, as of November 20, 1981. The increase represents $4,350.00 in fees and $6.00 in expenses for services rendered since February 1, 1981. Whelchel has filed an itemization of his services subsequent to the entry of the February 4, 1981, circuit court judgment. The fee for post-judgment services is not unreasonable. The court finds that the amount of Whelchel's claim is $39,293.78 plus interest, at the appropriate legal rate, since November 20, 1981.
H. David Cate was awarded a fee of $10,000.00 for his services as Special Master in connection with the breach of contract action of Walker against Robby's. That fee was to be paid by Walker and Robby's. The...
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