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#2111

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In re:

VILLA WEST ASSOCIATES,

DEBTOR

CASE NO. 88-40614-7

CHAPTER 7

DARCY D. WILLIAMSON, TRUSTEE,

PLAINTIFF,

v.

FRED C. KAY,

DEFENDANT AND THIRD-PARTY PLAINTIFF

v.

LESLIE M. BURNS, et al.,

THIRD-PARTY DEFENDANTS.

ADVERSARY NO. 89-7309



MEMORANDUM OF DECISION ON ATTORNEY FEES

This proceeding is before the Court for resolution of the last issue involved in the parties' dispute, the amount of attorney fees and expenses that should be paid by the parties who breached their fiduciary duty. The "Amended Motion of Third Party Defendants Doug and Ann Kay Submitting Attorney's Fees and Expenses" was filed December 11, 1994. Doug and Ann Kay (D&A Kay) appear by counsel Cindy L. Reams of Weisenfels & Vaughn, P.C. MN Associates (MNA) filed a response to the motion through counsel Robert J. Bjerg of Seigfreid, Bingham, Levy, Selzer & Gill, P.C. The Court has reviewed the motion and response and in accordance with its prior decisions concerning fees and expenses finds as follows.

The applicant has requested fees in the amount of $38,655 and expenses in the amount of $3,159.21. The fees and expenses are alleged to have been incurred in connection with the cross-claims between MNA and D&A Kay. The Court's review is premised on this general assertion.

The following adjustments have been made to the request. The Court rejects MNA's general complaint that the fees and expenses are unreasonably high because the factual and legal issues in this matter were not complex and the request exceeds the amount that the Court determined MNA should recover from D&A Kay. The Court also rejects the assertion that nearly all the fees are insufficiently documented. However, the Court does agree that fees for communications and conferences with Fred Kay and his counsel should not be allowed. Though it is possible that some contact with them would have been appropriate in regard to the issues between D&A Kay and MNA, it is at least equally possible that such conversations pertained to other issues not compensable in this application. The entries are insufficiently documented to enable the Court to determine their relevance and applicability to properly compensable tasks. The Court agrees that the fees incurred in the premature appeal to the Tenth Circuit should not be allowed. However, the Court will allow the time spent preparing the fee application. The total fees that will be allowed are $27,068.75.

MNA's objection to the claimed expenses is partly correct. Many of the expenses appear to be items that should be part of the applicant's ordinary office overhead and not charged to its clients. In addition to the transcript costs conceded to be compensable, the Court will allow the photocopy expenses at the Jackson County Law Library. The total allowable expenses are $672.27. Long distance telephone charges are normally compensable but the application does not correlate any of these charges with specific calls; since a number of calls were to Fred Kay and his counsel, the Court cannot determine which of the charges would be allowable and must deny them all. The applicant has not documented what materials were sent by telecopy, federal express, and similar services, and has not explained why use of such expensive delivery methods was necessary. Except for the photocopy charges incurred at the law library, photocopying expenses have not been shown to be anything but a part of normal office overhead.

The Court previously determined that the Villa West limited partners who formed MNA breached their fiduciary duty to D&A Kay by failing to offer them the chance to participate in MNA on an equal footing, and that those limited partners should be required to pay the attorney fees and expenses which D&A Kay were forced to incur as a result of that breach. MNA now argues it is entitled to set off against those fees and expenses a pro rata share of the legal expenses D&A Kay would have had to pay if they had been offered and had accepted the chance to participate in MNA. However, D&A Kay were not offered an opportunity to participate in MNA and so were not allowed to participate in any of MNA's decisions, including its hiring and control of counsel. Furthermore, the Court believes it is appropriate to punish the MNA partners' breach of their fiduciary duty by refusing to allow them to charge their victims amounts the victims might have owed had the partners not breached their duty.

For these reaons, the fees allowed are $27,068.75, and the expenses allowed are $672.27. Doug and Ann Kay will be awarded a judgment for $27,741.02 against MN Associates.

The foregoing constitutes Findings of Fact and Conclusions of Law under Rule 7052 of the Federal Rules of Bankruptcy Procedure and Rule 52(a) of the Federal Rules of Civil Procedure. A judgment based on this ruling will be entered on a separate document as required by FRBP 9021 and FRCP 58.

Dated at Topeka, Kansas, this ____ day of March, 1995.













_________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS











In re: )

)

VILLA WEST ASSOCIATES, ) CASE NO. 88-40614-7

) CHAPTER 7

DEBTOR. )

)

)

DARCY D. WILLIAMSON, TRUSTEE, )

PLAINTIFF, )

v. ) ADVERSARY NO. 89-7309

)

FRED C. KAY, )

DEFENDANT AND )

THIRD-PARTY )

PLAINTIFF )

v. )

LESLIE M. BURNS, et al., )

THIRD-PARTY )

DEFENDANTS. )

)



JUDGMENT ON DECISION ON ATTORNEY FEES

This proceeding was before the Court for resolution of the last issue involved in the parties' dispute, the amount of attorney fees and expenses that should be paid by the parties who breached their fiduciary duty. The "Amended Motion of Third Party Defendants Doug and Ann Kay Submitting Attorney's Fees and Expenses" was filed December 11, 1994. Doug and Ann Kay appeared by counsel Cindy L. Reams of Weisenfels & Vaughn, P.C. MN Associates filed a response to the motion through counsel Robert J. Bjerg of Seigfreid, Bingham, Levy, Selzer & Gill, P.C. The Court reviewed the motion and response, and issued its Memorandum of Decision.

For the reasons stated therein, the Court determined that the Kays should be awarded fees of $27,068.75, and expenses of $672.27. Doug and Ann Kay are hereby granted a judgment for $27,741.02 against MN Associates.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this ____ day of March, 1995.













_________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

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