In re Caribbean Construction Services, Inc.

283 B.R. 388, 2002 Bankr. LEXIS 951, 40 Bankr. Ct. Dec. (CRR) 17, 2002 WL 31108561
CourtUnited States Bankruptcy Court, D. Virgin Islands
DecidedAugust 29, 2002
DocketNo. 1-93-00024-BM
StatusPublished
Cited by2 cases

This text of 283 B.R. 388 (In re Caribbean Construction Services, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Virgin Islands primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Caribbean Construction Services, Inc., 283 B.R. 388, 2002 Bankr. LEXIS 951, 40 Bankr. Ct. Dec. (CRR) 17, 2002 WL 31108561 (vib 2002).

Opinion

[390]*390 MEMORANDUM OPINION

BERNARD MARKOVITZ, Bankruptcy Judge.

The sum of $72,768.28 is available in this case for distribution to debtor’s creditors.

The chapter 7 trustee, counsel to the chapter 7 trustee, and special counsel to the chapter 7 trustee have submitted applications requesting compensation for services they have provided in this case and for reimbursement of their expenses. The total amount they request is $69,653.74, approximately 95.7% of what is available for distribution. While professionals who perform services in a bankruptcy case should be amply compensated for their time and effort, the compensation requested in this case is excessive and shall be reduced accordingly. We acknowledge that the professionals convinced defendant Thelen Reid & Priest (hereinafter “The-len”), counsel to defendant Henry Ziegler (hereinafter “Ziegler”), to disgorge inappropriately paid fees and, created this res. Notwithstanding that, serious consideration must also be given to the creditors of this debtor who have been paid little or nothing on the debts that are the basis and foundation of this case.

Chapter 7 trustee John Ellis requests the maximum trustee compensation in the amount of $6,889.31 for his services and reimbursement of his expenses in the amount of $68.82. The total amount he requests is $6,955.13. As he was at most an observer in this case, we will reduce compensation for his services to $3,500.00 and will grant his request for reimbursement of expenses in the amount of $68.82.

Attorney Kevin Rames, counsel to the chapter 7 trustee, requests compensation in the amount of $17,647.50 for his legal services and reimbursement of his expenses in the amount of $370.98. The total amount he requests is $18,018.48. We will reduce compensation for his services to $10,985.50 and will grant his request for reimbursement of expenses in the amount of $370.98.

Attorney Carol Rich, special counsel to the chapter 7 trustee, requests compensation in the amount of $41,320.00 for her legal services and reimbursement of her expenses in the amount of $3,357.13. The total amount she requests is $44,677.13. We will reduce the compensation for her services to $33,060.00 and will grant her request for reimbursement of expenses in the amount of $3,357.13.

-FACTS-

An involuntary chapter 7 petition was brought against debtor on December 13, 1993. The order for relief was entered on June 29, 1994. A chapter 7 trustee was appointed on July 27,1994.

The case was converted to a chapter 11 proceeding on November 17, 1994, and was reconverted to a chapter 7 proceeding on February 1, 1996. Kevin Rames was ap[391]*391pointed as chapter 7 trustee after reconversion.

Henry Ziegler, debtor’s sole shareholder and principal, brought a civil action in debtor’s name in state court in New York against Zurich Insurance Company in 1994. The chapter 7 trustee neither knew of the lawsuit nor was involved in its prosecution. Thelen served as counsel to Ziegler in prosecuting the lawsuit.

While the above lawsuit was pending, the bankruptcy case was closed on December 26, 1996, after the chapter 7 trustee issued a report of no distribution.

Summary judgment in the amount of $226,733.99 was entered in 1997 in favor of debtor and against Zurich Insurance with respect to Count I of the complaint of the lawsuit pending in state court in New York. In July of 1998, after Zurich had satisfied the judgment, Thelen was paid the sum of $72,786.28 in legal fees by Henry Ziegler, who retained the remainder of the satisfaction for himself.

A verdict and judgment in the amount of $1,079,293.15 was entered in August of 1998 in favor of debtor and against Zurich Insurance with respect to Count II of the complaint in the lawsuit. Zurich Insurance appealed the judgment.

Upon learning of the above lawsuit in New York, the United States trustee brought a motion on December 11, 2000, some four years after it was closed, to reopen debtor’s bankruptcy case. The motion to reopen was promptly granted on December 22, 2000. John Ellis was appointed as chapter 7 trustee shortly thereafter on December 29, 2000.

On January 23, 2001, Kevin Rames, the chapter 7 trustee in this bankruptcy case when it was closed in December of 1996, was appointed on a contingency fee basis as special counsel to the chapter 7 trustee for the purpose of recovering bankruptcy estate assets. He was to be paid one-third of anything recovered on behalf of the bankruptcy estate.

Henry Ziegler brought Adversary No. 001-001 against chapter 7 trustee Ellis and attorney Rames on April 12, 2001. In Count I of the complaint Ziegler sought a declaration that the chapter 7 trustee had abandoned debtor’s claim against Zurich Insurance and that it belonged to Ziegler as debtor’s sole shareholder. He also requested an injunction prohibiting chapter 7 trustee Ellis and attorney Rames from interfering with his pursuit of the lawsuit. Ziegler alleged in Count II of the complaint that chapter 7 trustee Ellis and attorney Rames had tortiously interfered with his relationship with Thelen and with his further prosecution of the above lawsuit against Zurich Insurance and requested money damages.

Chapter 7 trustee Ellis brought a motion on April 24, 2001, to employ attorney Carol A. Rich and her law firm as special counsel for the limited purpose of representing the chapter 7 trustee as defendant in the above adversary action brought by Ziegler. The motion was granted on May 17, 2001.

In addition to answering the complaint, chapter 7 trustee Ellis asserted various counterclaims against Ziegler and a third-party complaint against Thelen.

That portion of the order of January 23, 2001, appointing attorney Rames on a contingency fee basis as counsel to the chapter 7 trustee was vacated on June 5, 2001. Attorney Rames was to be compensated for his services in accordance with the requirements set forth in § 330 of the Bankruptcy Code rather than on a contingency fee basis.

Thelen answered the chapter 7 trustee’s counterclaim on June 20, 2001. It also asserted a counterclaim of its own against the chapter 7 trustee seeking compensa[392]*392tion for its representation of debtor in the lawsuit against Zurich Insurance and for costs it had incurred in so doing.

On August 2, 2001, a New York appellate court reversed the judgment with respect to Count II of the complaint in favor of debtor and against Zurich insurance in the amount of $1,079,239.15.

Shortly thereafter, on August 28, 2001, Henry Ziegler threw in the towel and brought a motion seeking voluntary dismissal with prejudice of his claims in the above adversary action against chapter 7 trustee Ellis and attorney Rames. The motion was granted on November 11, 2001. Dismissal of these claims left unaffected the counterclaim of the chapter 7 trustee against Ziegler and the chapter 7 trustee’s third-party complaint against Thelen as well as its counterclaim against the chapter 7 trustee.

On January 14, 2002, the chapter 7 trustee brought a motion to approve a settlement of his third-party complaint against Thelen and its counterclaim against him. Thelen agreed to turn over to the chapter 7 trustee the compensation it had received from Henry Ziegler for services it rendered in the action against Zurich Insurance — i.e., $72,768.28 — and agreed to dismissal of its counterclaim against the chapter 7 trustee.

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N.D. West Virginia, 2023

Cite This Page — Counsel Stack

Bluebook (online)
283 B.R. 388, 2002 Bankr. LEXIS 951, 40 Bankr. Ct. Dec. (CRR) 17, 2002 WL 31108561, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-caribbean-construction-services-inc-vib-2002.