VP Louisville, LLC v. NBH Bank, N.A.

578 S.W.3d 753
CourtCourt of Appeals of Kentucky
DecidedJune 28, 2019
DocketNO. 2017-CA-000055-MR
StatusPublished
Cited by3 cases

This text of 578 S.W.3d 753 (VP Louisville, LLC v. NBH Bank, N.A.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
VP Louisville, LLC v. NBH Bank, N.A., 578 S.W.3d 753 (Ky. Ct. App. 2019).

Opinion

THOMPSON, K., JUDGE:

This appeal concerns attorney fees and expenses to legal counsel hired by a court-appointed receiver in a foreclosure action. VP Louisville, LLC, argues that while the Jefferson Circuit Court properly decided the issue of attorney fees and expenses in an April 2016 order, its subsequent orders were inconsistent with that order in that it did not specify the amount of attorney fees owed.

In June 2012, NBH Bank, N.A. filed a foreclosure action against VP Louisville after VP Louisville defaulted on a $4.2 million dollar loan secured by a hotel known as Value Place. Upon NBH Bank's motion, the trial court appointed Smiling Hospitality, Inc. as receiver for the hotel on July 12, 2012. The receiver order specifically stated:

That the Receiver and those agents and any property managers acting under its control shall have no personal liability in connection with their actions undertaken in furtherance of the Receiver's duties except for damages arising from their gross negligence, willful misconduct, and/or willful failure to comply with the orders of this Court.

The order also permitted Smiling Hospitality to retain attorneys with all reasonable expenses incurred to be expenses of the receivership. Smiling Hospitality and NBH Bank entered into an indemnity letter stating that Smiling Hospitality would have no liability as a result of acting as receiver.

Smiling Hospitality hired attorney Lewis J. Rotman, and the firm of Hinshaw & Culbertson, LLC (H&C), a Minnesota law firm, as its counsel. The Louisville, Kentucky, firm of Adams Law Group was hired as local counsel. The attorneys at H&C billed an hourly rate of $750 for Mr. Rotman, $315 for Shushanie Liesinger, and *755$220 for Jessica Nelson. The attorneys at the Adams Law Group billed at an hourly rate of $285-$300 for Tad Adams and $225 for Carolyn Bauer.

Smiling Hospitality filed its first receiver report on July 20, 2012, wherein it described deplorable conditions at the hotel, including a methamphetamine lab. Thereafter, Smiling Hospitality filed monthly reports detailing its actions during that month. During the five months the receivership was in place, VP Louisville filed more than thirty motions, including objections to every receiver report, alleging Smiling Hospitality had engaged in misconduct as receiver. The trial court at no time found Smiling Hospitality engaged in any misconduct.

On October 29, 2012, the parties executed a settlement agreement which provided that operation of the hotel would be returned to VP Louisville. Smiling Hospitality remained as receiver until December 14, 2012, and operation of the hotel was then returned to VP Louisville.

On January 11, 2013, Smiling Hospitality filed a final report and a supplemental report on August 13, 2013. VP Louisville objected to the attorney fees and expenses billed by H&C to Smiling Hospitality in the amount of $206,203.52. There was no objection to any of the Adams Law Group's attorney fees. The trial court held an evidentiary hearing on the attorney fees and expenses billed by H&C, which the trial court stated was the "sole remaining issue[.]"

VP Louisville presented expert testimony from attorney Michael Gosnell who testified he had represented numerous receivers appointed for properties that he had foreclosed on for lenders. He testified the standard hourly rate for attorneys representing receiverships in Jefferson County ranges from $200-$250 per hour. His opinion was that any fees exceeding $250 per hour do not comport with local standards and fees in excess of $350 per hour should be considered extremely excessive.

Smiling Hospitality defended H&C's attorney fees as reasonable and necessary pointing to the expertise of Rotman and H&C in the area of hotels and receiverships, the success of the receivership and VP Louisville's litigious nature and harassing conduct resulting in over thirty motions and hearings. It also relied on the trial court's order giving Smiling Hospitality the power to hire attorneys as it deemed necessary.

The trial court ruled that the receiver had the right pursuant to the receiver order to hire and pay its national counsel. However, it ruled that H&C's rates exceeded local rates. It further found that for the most part, the attorney fees sought from June 2012 thru December 2012 were necessary except fees incurred for attachment of a VP Columbus II bank account, finding that was unnecessary litigation because the account was not an asset of VP Louisville.

The trial court's April 29, 2016 order stated that Smiling Hospitality was entitled to pay H&C or was entitled to a refund of any fees already paid in excess of the following: H&C "shall be compensated at the hourly rate of $375 for Lewis Rotman; $200 for Shushanie Liesinger; and $200 for Jessica Nelson." The court further ordered that there was no compensation for the time H&C billed for attachment of the VP Columbus II bank account. Finally, the time and expenses H&C billed for defending attorney fees were ordered not to be compensated by Smiling Hospitality. There was no final and appealable language in the order.

Pursuant to the April 2016 order, H&C issued a total refund of $112,431 to Smiling Hospitality, consisting of a $67,236 cash *756refund and a $45,195 write-off of unpaid fees. Upon receipt of the $67,236 refund, the receivership went from having a zero balance to $67,236.

The receiver then filed a motion on June 16, 2016, seeking final discharge and guidance on how to disburse the proceeds resulting from the $67,236 cash refund. Attached to the motion was a letter from H&C explaining it had complied with the April 2016 order by a $84,272 rate adjustment, amounts billed for the attachment of the VP Columbus II bank account deducted in the amount of $4,067 and deduction of fees defending attorney fees. Smiling Hospitality attached an affidavit stating that it approved of the fees charged and H&C had complied with the April 2016 order.

On June 20, 2016, VP filed a motion requesting that the trial court enter an order consistent with its April 2016 order. According to VP Louisville's calculations, H&C owed a refund in the amount of $134,724.39.

NBH did not object to the $112,431 refund and sought to be paid a portion of the $67,236 remaining cash to pay a $60,000 loan it made to Smiling Hospitality. On July 22, 2016, the trial court entered an order directing Smiling Hospitality to disburse $60,000 to NBH. That order did not include both CR 54.02 finality findings.

On August 3, 2016, VP Louisville again filed a motion requesting the court to enter judgment in accordance with its April 2016 order. At this point, with the court having directed that the $60,000 be used to pay NBH, Smiling Hospitality had no funds in the receivership to continue defending itself. As a result, Smiling Hospitality and NBH agreed that pursuant to the indemnity letter, Smiling Hospitality could pay its counsel with the $60,000 previously ordered to be paid NBH.

A hearing was convened on October 6, 2016, but no one appeared on behalf of VP Louisville. VP Louisville's motion was denied, and Smiling Hospitality was discharged as receiver.

VP Louisville filed a response to the discharge of Smiling Hospitality and renewed its motion regarding the alleged overpayment of attorney fees. Smiling Hospitality responded.

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Cite This Page — Counsel Stack

Bluebook (online)
578 S.W.3d 753, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vp-louisville-llc-v-nbh-bank-na-kyctapp-2019.