Lippl v. International Fidelity Insurance

514 B.R. 127, 2014 WL 3729564, 2014 U.S. Dist. LEXIS 101875
CourtDistrict Court, W.D. Pennsylvania
DecidedJuly 25, 2014
DocketNo. 14cv0676
StatusPublished

This text of 514 B.R. 127 (Lippl v. International Fidelity Insurance) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lippl v. International Fidelity Insurance, 514 B.R. 127, 2014 WL 3729564, 2014 U.S. Dist. LEXIS 101875 (W.D. Pa. 2014).

Opinion

Memorandum Opinion

ARTHUR J. SCHWAB, District Judge.

I. Introduction

This case is before the Court on appeal from a final order of the United States Bankruptcy Court for the Western District of Pennsylvania, the Honorable Thomas P. Agresti. The question presented is whether the Bankruptcy Court erred in granting the Motion of International Fidelity Insurance Company (“IFIC”) to Compel Abandonment of Certain Estate Property (“Motion to Compel”), where the Bankruptcy Trustee represented on the record that he would not pursue the Construction Claims, IFIC said it would not pursue the Construction Claims, and John R. Lippi, an attorney who pursued the Construction Claims, who is no longer employed by the Bankruptcy Estate or the Bankruptcy Trustee, was the only party out of 300 creditors to file any response or objection. For the reasons that follow, the decision of the Bankruptcy Court will be affirmed.

II. Standard of Review

Federal district courts exercise appellate jurisdiction over final judgments, orders and decrees entered by bankruptcy courts. 28 U.S.C. § 158(a)(1). Federal Rule of Bankruptcy Procedure 8013 provides that a reviewing court “may affirm, modify, or reverse a bankruptcy judge’s judgment, order, or decree or remand with instructions for further proceedings.” Fed. R. Bankr. P. 8013. “[A] bankruptcy court’s legal determinations are reviewed de novo, its factual findings for clear error and its exercise of discretion for abuse.” Official Committee of Unsecured Creditors of J. Allen Steel Co. v. Nucor-Yamato Steel Co., 336 B.R. 226, 229 (W.D.Pa.2005). “Mixed questions of fact and law must be broken down and reviewed under the applicable standard.” Titus v. Shearer, 498 B.R. 508, 514 (W.D.Pa.2013). The District Court acts as an appellate tribunal and is governed by traditional standards of appellate review when reviewing a decision of the Bankruptcy Court. Accordingly, the Court reviews the Bankruptcy Court’s findings of fact under a clearly erroneous standard, and its conclusions of law are reviewed de novo. In re Four Three Oh, Inc., 256 F.3d 107, 112 (3d Cir.2001); In re Trans World Airlines, Inc., 145 F.3d 124, [129]*129131 (3d Cir.1998); Fed.R.Bankr.P. 8013.1

III. Statement of the Case2

This appeal arises from the Order of Court dated April 24, 2014, by the United States Bankruptcy Court for the Western District of Pennsylvania wherein it granted IFIC’s Motion to Compel Abandonment (doe. no. 1, citing doc. no. 646). In the Motion to Compel, IFIC sought an Order compelling the Chapter 7 Trustee for the Bankruptcy Estate of Flaherty Mechanical Contractors, LLC (“Trustee”) to abandon its legal causes of action against the Board of Education of the School District of the City of Pittsburgh (“School District”).

Flaherty Mechanical Contractors, LLC (“Debtor”) had previously brought suit against the School District for alleged nonperformance of certain contractual obligations under three (3) construction contracts between Debtor and the School District. These three (3) Construction Claim eases were filed in the Court of Common Pleas of Allegheny County. Prior to filing for bankruptcy, however, the Debtor employed attorney Appellant Lippi to litigate the Construction Claims against the School District.

The School District also sued the Debtor and IFIC on the two (2) construction projects that gave rise to the Construction Claims, also in state court. Therefore, a total of five (5) lawsuits were pending between the parties in State Court. The State Court litigation remained pending when IFIC filed the instant Motion to Compel Abandonment. IFIC requested the Bankruptcy Court to issue an Order compelling the Bankruptcy Trustee to abandon the Construction Claim to IFIC so that IFIC could potentially negotiate a “global settlement” of State Court Litigation (doc. no. 1-46/47). In connection therewith, IFIC served the Abandonment Motion on approximately 300 creditors and interested parties in the bankruptcy case, none of whom, with the sole of exception of Appellant Lippi, filed any response or objection thereto (doc. no. 1-51).

IV. Procedural History of Bankruptcy Court Proceedings

On September 24, 2010 (“Relief Date”), the Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. Because the State Court litigation had commenced prior to the Relief Date, the Debtor filed an application to employ attorney Lippi as Special Counsel to pursue the State Court Litigation (doc. no. 1-2). The Bankruptcy Court approved Lippi to continue to represent the Debtor in State Court (doc. no. 1-5). On September 4, 2012, the Bankruptcy Court converted the Chapter 11 filing to a Chapter 7 and appointed the Trustee to represent the estate in bankruptcy (doc. no. 1-59). Prior to conversion to Chapter 7, the Bankruptcy Court approved Lippi’s first interim application for compensation and reimbursement of expenses in the total amount of $106,816,61 (doc. no. 1-12). After conversion and appointment of the Trustee, Lippi filed a Chapter 11 fee petition seeking approval of $8,624.50. After [130]*130the Trastee objected (doc. no. 1-36), the Bankruptcy Court entered a modified order granting Lippi’s Chapter 11 fee petition in a converted case in the amount of $8,624.50 (doc. no. 1-39).

After the State Court made a ruling against the Debtor during the liability phase of the Construction Claims, the Trustee then filed a Motion to Employ Special Counsel (David Donnelly, Esquire), as Special Counsel to the Trustee, to litigate the remainder of the Construction Claims. Lippi then filed a Response to the Application to Employ Donnelly (doc. no. 1-43/44) and by Order of Court dated February 7, 2013, the Bankruptcy Court granted the Trustee’s Motion to Employ Donnelly as Special Counsel, (doc. no. 1-45).

While the damages portion of the Construction Claims and the School District Claims remained pending (for over a year) in the State Court litigation, on March 12, 2014, IFIC filed the Motion to Compel, seeking an Order by the Bankruptcy Court directing the Trustee to abandon the Construction Claims to IFIC so IFIC could negotiate a global settlement of the States Court Litigation (doc. no. 1-46/47/48).

On April 3, 2014, despite sending notice of 300 creditors, Appellant Lippi filed the sole response to the Motion to Compel and in it filed a Limited Response arguing that Movant failed to show by a preponderance that the claims are of inconsequential value and benefit to the estate, and that the claims are burdensome to the estate (doc. no. 1-51). Importantly, also on April 3, 2014, the Trustee filed a Response consenting to the relief requested in IFIC’s Motion to Compel (doc. no. 1^49).

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Bluebook (online)
514 B.R. 127, 2014 WL 3729564, 2014 U.S. Dist. LEXIS 101875, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lippl-v-international-fidelity-insurance-pawd-2014.