Guinee v. Fahringer (In re Wilson)

75 B.R. 990, 1987 Bankr. LEXIS 1246
CourtDistrict Court, E.D. Virginia
DecidedAugust 3, 1987
DocketBankruptcy No. 84-01415-A; Adv. No. 85-0095-A
StatusPublished

This text of 75 B.R. 990 (Guinee v. Fahringer (In re Wilson)) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Guinee v. Fahringer (In re Wilson), 75 B.R. 990, 1987 Bankr. LEXIS 1246 (E.D. Va. 1987).

Opinion

MEMORANDUM OPINION

MARTIN V.B. BOSTETTER, Jr., Chief Judge.

This matter is here for decision on the Trustee’s motion for approval of a Stipulation of Facts and Documents entered into by the Trustee and defendants Herald Price Fahringer and Marian S. Rosen. Received in Chambers the day prior to the hearing were two documents affecting the Court’s disposition of the motion: a written objection from the debtor, Edwin P. Wilson, and a letter from Greta C. Van Susteren who acts as criminal counsel for Mr. Wilson. Because the Court had not had an adequate opportunity to review these documents, we reserved a ruling on the stipulation.

The facts pertinent to a resolution of this matter are as follows. At the time Wilson filed his petition in bankruptcy, the Circuit Court of Fauquier County had scheduled for sale at auction a number of the debtor’s properties, including Bollingbrook, Maxwel-ton and Elmwood Farms. The parcels were the subject of consolidated partition suits instituted by the debtor’s ex-wife, Barbara H. Wilson, before that court, and a public auction stood scheduled for October 2,1984. On October 1, the Fauquier County count approved a private sale of Bolling-brook Farm, and Wilson filed a petition in bankruptcy in the District of New Jersey which was later transferred to this district. The sale of Bollingbrook Farm, already approved by the Fauquier County court, went to settlement pursuant to an order of this Court dated March 15, 1985 granting Mrs. Wilson relief from the automatic stay to proceed with the sale.

At the time of its sale, Bollingbrook Farm was heavily encumbered. The Travelers Insurance Company held a Deed of Trust as security for a note in the amount of One-million Seven Hundred and Ninety Thousand Dollars ($1,790,000.00) which encumbered Maxwelton and Elmwood Farms as well as Bollingbrook Farm. Further, Wilson had conveyed to the defendants at bar his interest in Bollingbrook Farm in partial satisfaction of the defendants' claims for unpaid legal fees.

The Trustee in Bankruptcy, unable to locate evidence that the defendants were legitimate creditors of the debtor, initiated this adversary proceeding seeking an order enjoining the defendants from receiving any proceeds of the sale of Bollingbrook Farm. A threshold issue affecting the distribution of the proceeds was the defendants’ contention that the Travellers’ lien should be prorated among the various properties it encumbered. An order mandating that the lien be applied pro rata would substantially reduce the portion of the proceeds due the Travellers, assuring the defendants that their portion of the proceeds would satisfy Wilson’s outstanding legal fees. This Court disagreed with the defendants’ position, and ruled that the Trav-ellers had the right to full satisfaction of Wilson’s debt from the proceeds of Bolling-brook Farm. As a consequence of the Court’s ruling, neither Fahringer nor Ro-sen received full payment on the debts the Trustee now concedes are owed by Wilson.

The defendants have expressed their intention to appeal this Court’s ruling on the application of the Travellers’ lien; the stipulation presently before the Court settles all other matters at issue in this proceeding, making further trial in this Court unnecessary. After a thorough examination of the stipulation and the July 14, 1986 submissions on behalf of the debtor, approval of the stipulation is warranted.

[992]*992Mr. Wilson’s objections fall into two general categories. First, he asserts that the stipulation fails to correctly recite his fee agreements with attorneys Fahringer and Rosen. Second, Wilson contends that the services noted on the attorneys’ billing statements were not actually performed. In reference to each objection, Wilson requests additional time to retrieve documents and other evidence in support of his position. In lieu of submitting contradictory evidence, Wilson disputes assertions made in the stipulation and, paragraph by paragraph, submits his version of events.

Under the stipulation of facts, Wilson retained Fahringer to handle criminal matters in Washington, Alexandria, Houston and New York and performed legal services amounting to $860,500.00 and incurred expenses in the amount of $52,507.00. The parties further stipulate that Fahringer received payments from Mr. Wilson totaling $158,944.00 and $100,724.00 from the sale of Bollingbrook Farm, for a total payment on account of $259,668.00. $153,339.00 remains due.

Wilson asserts that Fahringer agreed to a fee of $75,000.00 per case and an additional fee of $25,000.00 for appeal of an adverse result. Because Fahringer handled only, the Virginia trial and appeal, one-half of the Houston case, and the preliminary paperwork in the Washington, D.C. case, Wilson claims that Fahringer has been paid in full. As a collateral matter, Wilson asserts that Fahringer’s representation was less than exemplary: “[According to all counsel I have consulted [Fahringer and Rosen] missed the key elements of the cases and the appeals were to [sic] weak in logic to prevail.”

Wilson alleges that he signed the encumbrances upon Bollingbrook Farm under something akin to duress or mistake:

Fahringer did not advise the cases would cost a million dollars. I had already decided to discharge him. I did sign a deed to Bollingbrook Farm. I relied on Fah-ringer because I was distressed at losing the Houston case and couldnt [sic] think. He told me I was signing only a loan agreement form, to guarantee fees if New York cases and appeals were necessary ... Fahringer came to Otisville prison ... to get a $400,000 note signed and tore up the $150,000 [note]. The idea being since IRS had assessments against me no other attorney would take [the] case he would but wanted another note. He admitted it was not legal since IRS had moved on all property. Again this was represented as a note not a deed obligation.

Under the stipulation of facts, Wilson retained Rosen to assist first in the Houston case, and then in both the New York indictment and various appeals. Total fees accrued are stipulated in the amount of $386,098.00 and total expenses amounted to $90,677.00. Rosen received payments from the debtor totalling $58,944.00 and received $100,724.00 from the sale of Bollingbrook Farm, for a total payment on account of $159,668.00. $317,107.00 remains due.

Wilson claims that Rosen agreed to a $75,000.00 maximum for the Houston case, in which he contends she acted only as local counsel, and $25,000.00 for appeals. He also asserts that he paid Rosen $195,000.00 rather than the $58,944.00 to which the Trustee has stipulated. Wilson disputes the accuracy of Rosen’s billings, claiming that her accountings show fees paid to witnesses who did not testify at trial, or to persons having no connection with the case.

Wilson has, to date, submitted no evidence to support his version of his fee arrangements with Fahringer or Rosen. The Trustee had every incentive to challenge the fees claimed to be due to both Fahringer and Rosen and to challenge the attorneys’ encumbrance on Bollingbrook Farm, yet the Trustee has examined the billings and transactions and stipulated to the fees due. Counsel for Fahringer summarized the process by which the parties arrived at the stipulation:

And in the course of getting where we are, we have exchanged documents, exchanged a raft of information. And I believe the outcome of that investigation, particularly on Mr. Leach’s part because [993]

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Bluebook (online)
75 B.R. 990, 1987 Bankr. LEXIS 1246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/guinee-v-fahringer-in-re-wilson-vaed-1987.