Katiraie et al v. Gottlieb, Chapter 7 Trustee et al

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
SAN FERNANDO VALLEY DIVISION
In re:
Functional Restoration Medical Ctr Inc
Debtor(s).
Corona Radiology Medical Center, Inc.,
Sepehr Katiraie, Sephehr Katiraie, Dr.
Plaintiff(s),
v.
Functional Restoration Medical Ctr Inc,
David K Gottlieb, Chapter 7 Trustee,
Ashor Heikali, Ebrahim Heikali, Nasser
Heikali, Moossa Heikali, Nato Fund, Inc.,
Radnet Management, Inc., United
Imaging, LLC, United Medical Imaging
Healthcare, Inc., United Medical Imaging
Inc, United Medical Imaging
Management, Inc., Bruce Yasmeh
Defendant(s).
Case No.: 1:06-bk-10306-GM
Adv No: 1:08-ap-01434-GM
Chapter 7
ORDER GRANTING DEFENDANT
CHAPTER 7 TRUSTEE DAVID GOTTLIEB’S
MOTION FOR AN AWARD OF
ATTORNEY’S FEES OF $105,203.50
AND COSTS OF $383.00
Date: July 24, 2012
Time: 10:00 a.m.
Courtroom: Courtroom 303
Trustee David Gottlieb ("Trustee") moves for an award of $116,929 in attorney’s
fees and $383 in costs.
Background
Trustee was one of a number of defendants in this adversary proceeding. In
response to several motions for summary adjudication, on 5/10/12 the court entered a
FILED & ENTERED
JUL 27 2012
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	williams
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Memorandum of Opinion on Motions for Summary Judgment ("Opinion") and an Order
on Motions for Summary Judgment ("Order"), in which, among other things, the court
granted the Plaintiffs summary adjudication on the first claim for declaratory relief and
granted Trustee summary adjudication on all other claims and dismissed the Trustee
from further involvement in this adversary proceeding.
Plaintiffs moved for limited reconsideration of the Opinion and Order, asking that
the court reconsider its grant of summary adjudication to the Trustee. The court denied
Plaintiffs' motion for reconsideration.
Motion
Trustee seeks an award of attorney’s fees and costs as prevailing party, pursuant
to FRCP 54(d)(2), and FRBP 7054(b) and LBR 7054-1.
Trustee also cites the Asset Purchase Agreement, pursuant to which the debtor
sold substantially all of its business to United Imaging (the "APA"). Paragraph 10.10 of
APA awards attorneys fees to prevailing parties in actions to enforce APA or because of
dispute, etc. regarding APA. Counsel for Plaintiffs signed and approved the court order
approving APA, so Plaintiffs became bound by the APA's attorneys' fees clause.
California Civil Code § 1717 requires payment of attorneys fees to prevailing parties
where required by contract.
Opposition
Plaintiffs oppose the motion:
(1) The court's ruling in Goodarzi is inapplicable because Goodarzi and Naheedy
sought to be declared partners or tenants in common in the relevant centers, thereby
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subjecting themselves to the APA.
(2) Civil Code § 1717 does not apply because Plaintiffs are not parties to the
APA and their claims are not based on the APA.
(3) Plaintiffs are the "prevailing party" under §1717: (a) they obtained
declaratory relief pursuant to claim 1, which was the only contract-based claim and (b)
they obtained greater relief in the action as a whole.
(4) Trustee cannot recover attorney’s fees on Claims 2-10 (which are tort claims)
under Cal. Civ. Code §1717.
(5) If awarded, fees should be allocated among other nonsettling parties and
should not be awarded until final judgment in the action.
(6) Requested fees are excessive and Plaintiffs are entitled to an offset as
prevailing party on Claim 1.
Reply
This case is on all-fours with the my order in Goodarzi granting the Trustee his
attorney's fees for defending the estate against an attack seeking to recover money
from the estate for the sale of the estate's interest in the medical center. The Trustee
also argues that the time is right to grant the fee motion, that Katiraie is bound by the
APA, that fees for tort claims are allowable, and that the amount in the fee request is
reasonable.
Analysis
This adversary proceeding arises out of the sale by the estate of all of its right,
title, and interest in a series of radiology centers, including the one designated herein as
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the Corona Center. Dr. Katiraie and Corona Radiology Medical Center, Inc, (jointly
referred to herein as “Katiraie” of “Plaintiff”) claimed to be a 2/3 owner of the Corona
Center and opposed the sale on the basis that his property was being transferred.
The Court approved the sale and entered an order that included the following:
Katiraie and Corona Radiology Medical Center, Inc. assert ownership interest in
the Debtor’s Corona imaging center and the Debtor disputes this. Nonetheless,
the Debtor is selling “whatever rights, title and interest the Debtor and the
Debtor’s bankruptcy estate has to the Debtor’s Corona Imaging center, free and
clear of all liens, claims, and interests; this sale is without prejudice to the
respective rights, claims and defenses of the Debtor, on the one hand, and Dr.
Sepher Katiraie and CRMC, on the other hand. Nothing herein shall constitute a
waiver, discharge, or release of any claims Dr. Sepher Katiraie and CRMC, and
each of them, have or may have against Dr. Moosa Heikali.1
The Sale Order incorporated by reference the APA, which states at paragraph
10.10 that each party will pay its own expenses incurred in connection with the
Agreement or any transaction contemplated by the APA. “If any legal action is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees
and other costs incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled.”2
The Sale Order was approved as to form by Steven R. Fox, attorney for Katiraie
and CRMC.
The sale was entered into by the Debtor while this was still a debtor-in-
possession chapter 11 case. Although the Debtor had disputed whether Katiraie had an
interest in the Corona Center (which was why the Sale Order was written as it was), the
Trustee (once appointed) never claimed that the estate held any interest in those
1 Functional Restoration, 1:06-bk-10306, doc. 220, ¶26. This case will be referred to as the “Main Case.” This
particular document is referred to as the “Sale Order.”
2 Id., doc. 220, ¶5:5-12.
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assets. Further, the Trustee had received no payment for the assets claimed by
Katiraie because those were specifically excluded from the sale by paragraph 26 of the
Sale Order.
Before turning to an analysis and application of the law to this case, it is relevant
to look at the facts of the assertions against the Trustee. As noted in the Memorandum
of Opinion on the Motion for Partial Summary Judgment,3 the Trustee was named as a
defendant in the following claims:
(1) Declaratory Judgment under 28 U.S.C.A. §2201, seeking a determination of
the ownership interests of the various parties;
(2) Quiet Title under Cal. Civ. Proc. Code §761.010, for a determination of
Katiraie’s ownership against the interest claimed by the defendants as of 3/9/06 and
8/4/06, the date of the complaint, and the date of the memorandum;
(3) Accounting, for all monies due to Katiraie including in the post-petition/pre-
sale period;
(5) Conversion, for monies due from the sale and for monies due to Katiraie in
the post-petition/pre-sale period;
(6) Claim and Delivery, to recover property transferred under the sale order;
(7) Replevin, to recover property transferred under the sale order.
Everyone agreed that once the sale closed, the Trustee had no property left that
could be claimed by Katiraie. Thus there was no reason to include the Trustee in the
sixth and seventh claims for relief. The other two areas in which the Trustee is named
3 Katiraie v. Gottlieb, et. al, 1:08-ap-01434, doc. 270. This adversary proceeding will be referred to as the
“Adversary Proceeding” and the Memorandum of Opinion on the Motion for Partial Summary Judgment will be
referred to as the “Memorandum of Opinion.”
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are those seeking a determination that Katiraie was, in fact, a 2/3 owner of the Corona
Center and whether the Debtor had paid him the required amounts during the pre-sale
period.
When asked by the Court at oral argument on July 24, 2012 why Katiraie did not
dismiss the Trustee much earlier, his counsel asserted that this case needed to go
forward as to the Trustee because the Trustee never specifically agreed that Katiraie
had an ownership interest in Corona. It is true that the Trustee did not admit or deny
Katiraie’s contention that he was a 2/3 owner of the Corona Center at the time of the
sale.4 But the Trustee made it clear that the estate had no proceeds from the sale5 and
this has not been contested by Katiraie. Therefore there was no money to turnover to
Katiraie and the Trustee retained no property that Katiraie could assert an ownership
interest in. And beyond that, the language of the Sale Order made it perfectly clear that
the only thing sold was the interest of the estate and not of Katiraie.
Whether the Trustee agreed as to the efficacy of the contract between Heikali
(the principal of the Debtor) and Katiraie or not is totally irrelevant to the outcome of this
adversary proceeding. Even if the Trustee had asserted that there was no such
contract, the estate had no interest in it since all of the estate’s property had been sold
under the Sale Order. The Trustee was not even a percipient witness whose testimony
would be required to prove the existence or non-existence of a contract.
As to the money that Katiraie claimed from the time of the petition until the sale, if
he was owed any (and the Memorandum of Opinion found that he was not), he could
have asserted this by filing an administrative claim. If the Trustee disputed his claim,
the burden was on the Trustee to object. There was no reason to embroil the Trustee in
4 Adversary Proceeding, doc. 26.
5 Id., doc. 46.
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this hotly contested lawsuit in which the few months of collections was truly the pimple
on the back of the elephant.
FRCP 54(d) is not applicable to adversary proceedings in bankruptcy court.
Instead FRBP 7054(b) provides that "the court may allow costs to the prevailing party
except when a statute of the United States of these rules otherwise provides." By
removing the FRCP 54(d) prohibition on attorney’s fees as costs, the bankruptcy court
is given discretion in this area. Nonetheless, case law agrees that an award of
attorney’s fees to the prevailing party is not automatic, but must be based on statute,
contract, or some other recognizable theory.
Asset Purchase Agreement/California Civil Code §1717
The most obvious statutory basis in this case is whether the attorney’s fee clause
in the APA, which was incorporated by reference into the Sale Order, qualifies under
Cal. Civ. Code §1717, which states in relevant part as follows:
(a) In any action on a contract, where the contract specifically provides that
attorney's fees and costs, which are incurred to enforce that contract, shall be
awarded either to one of the parties or to the prevailing party, then the party who
is determined to be the party prevailing on the contract, whether he or she is the
party specified in the contract or not, shall be entitled to reasonable attorney's
fees in addition to other costs. . . .
Reasonable attorney's fees shall be fixed by the court, and shall be an element of
the costs of suit.
(b)(1) The court, upon notice and motion by a party, shall determine who is the
party prevailing on the contract for purposes of this section, whether or not the
suit proceeds to final judgment. Except as provided in paragraph (2), the party
prevailing on the contract shall be the party who recovered a greater relief in the
action on the contract. The court may also determine that there is no party
prevailing on the contract for purposes of this section. . . .
So the Court must first determine whether Katiraie’s objection to the sale and the
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signature of his attorney as to form on the Sale Order made him a party to the APA and
its attorney’s fee provision.
The most similar case that I could find is Super 7 Motel Associates v. Wang6, in
which a real estate broker was named by the buyer of a motel in a suit for fraud and in
which rescission was sought. The broker was not an actual party to the contract, which
was between the buyer and the seller, even though the broker had received his fees
pursuant to that contract. The Court of Appeal noted that although fraud is a tort and not
a contract claim, since the action was seeking rescission an award of fees under the
contract was permitted. However, the claim against the broker arose from his own
fraud, not from a contract to which he was a party or a third party beneficiary. So if he
had lost the case he would not have been liable to the plaintiff for fees. Thus he was
not able to recover his fees under Cal. Civ. Code §1717. However, had the contract
specifically included a promise to pay the broker he would have been a third party
beneficiary and would have been entitled to his attorney’s fees.
Thus under California law the court must review the Sale Order and its
incorporated APA to determine whether Katiraie qualifies as a party or as a third party
beneficiary.
Katiraie argue that since he (or his counsel) did not sign the APA and only
approved the Sale Order as to form, he is not bound by the attorneys’ fee provision of
the APA. But in fact the main thrust of this whole action against the Trustee is an attack
on the Sale Order and an effort to declare that the estate had not actually sold Katiraie’s
interest because the estate did not own that or that somehow the Trustee received
funds from the sale for Katiraie’s interest and that those funds are due to Katiraie.
6 16 Cal.App.4th 541 (1993).
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Further, as noted in the Memorandum of Opinion, one of the arguments made by
Plaintiff’s counsel was that Debtor might not have transferred its 1/3 interest in CRMC
as part of the sale and thus Katiraie and the Trustee are co-owners of CRMC.7 This
was a direct attack on the APA and the Court did not accept this argument. The Third
Amended Complaint also named the Trustee as a defendant in the Quiet Title claim and
the claim for an accounting
The Trustee was the prevailing party on all of these claims (except as to
declaratory relief, which the Trustee had not disputed) and all of them arose out of the
APA and/or the Sale Order.
Katiraie certainly never received anything under the APA or the Sale Order. In
fact any interest of his was specifically excluded. He was not a third-party beneficiary
since the APA was not made for his benefit or even with him in mind. However, as I
found in the Goodarzi case, the Sale Order was in fact meant to bind all persons,
whether they agreed or not.
Although Katiraie argues otherwise, this case is a mirror image of the Goodarzi8
one. In both cases, the Plaintiffs asserted a partial ownership interest in one or more of
the centers that was sold. In both cases the Court was aware of this and the Sale Order
specified that the sale would only be of the estate's right, title, and interest, and not of
any interest of any third party (namely Katiraie in this case, Goodarzi and Naheedy in
the Goodarzi case). Further, in both cases the money paid to the estate for the
purchase was not for the purchase of any interest of the third party, just for the interest
of the estate. This was made clear in the APA and the Sale Order.
Nonetheless, the Plaintiff(s) sued the Trustee seeking declaratory relief and to
7 Memorandum of Opinion, p. 24.
8 Goodarzi v. Functional Restoration Medical Ctr., Inc, 1:06-ap-01230.
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recover money from the estate. In the Goodarzi case there was a somewhat legitimate
reason to proceed against the Trustee since the Goodarzi parties had paid Heikali for
their interest prepetition and he had never completed the transfer of their partial
ownership interest. The lawsuit was to determine whether the Goodarzi parties had an
unsecured claim against the estate, or a 40% ownership interest in proceeds received
as a date certain, or had any interest in the property at all.
The court found that the Goodarzi parties were, in fact, general partners in the
center in question with a 40% interest. But since the sale order only sold the estate's
interest in that center, the estate received no proceeds for the transfer of the Goodarzi
parties' 40% interest, because that was never transferred. I noted in the findings after
trial in that case: "In summary, the plaintiffs are looking to the wrong defendant. They
chose to maintain their rights in the Brookshire Center and must pursue those rights
against those who are operating this business. Had they allowed the estate to sell their
interest, then this complaint would have been well-taken. But this is not what
happened."9
Here although the Debtor had disputed whether Katiraie had an interest in the
Corona Center (which was why the Sale Order was written as it was), the Trustee (once
appointed) never claimed that the estate held any interest in those assets. As in the
Goodarzi case, I also found that the Trustee had received no payment for the assets
claimed by Katiraie (which the court noted from the beginning).
As to awarding attorney's fees, this case is even more egregious than Goodarzi’s
since Katiraie continued the litigation against the Trustee even after the Goodarzi
opinion came down in February 2010. There was no reason to keep the Trustee in this
9 Id., doc. 46, p. 6-7.
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case as a party and this created an unnecessary burden on the estate. I hereby adopt
the reasoning in my tentative ruling in the Goodarzi case10 as a basis for awarding the
Trustee attorneys’ fees and costs.
Judicial Estoppel
Another argument made by the Trustee is that because Katiraie prayed for
attorney’s fees in his complaint, the Trustee is entitled to his attorney’s fees under state
law. The parties have given me several California cases dealing with the effect of a
claim for attorney’s fees in a pleading by the party who ultimately does not prevail and
then asserts that the other (prevailing) party is not entitled to its fees.
International Billing Service, Inc. v. Emigh concerned the breach of a
confidentiality agreement, which both parties had signed. This short agreement stated
that “You promise to reimburse Company for any legal fees, liability, or loss which
Company incurs as a result of any unauthorized disclosure or use of Confidential
Information by You."11 There was a dispute as to whether this really is a fee provision,
but in the pleadings the plaintiff specifically asked for attorney’s fees for a breach of the
confidentiality agreement. When defendants prevailed and sought their fees, the
plaintiff opposed, in part contending that the contract did not provide for a fees award.
The court held that the plaintiff was judicially estopped from asserting that there was no
contractual fee provision: “Where a party claims a contract allows fees and prevails, it
gets fees. Where it claims a contract allows fees and loses, it must pay fees.”12
Bear Creek Planning Committee v. Ferwerda13 is critical of International Billing
10 Id., doc. 56.
11 International Billing Service, Inc. v. Emigh, 84 Cal.App.4th 1175, 1180 (2000).
12 Id., at 1190.
13 193 Cal.App.4th 1178 (2011).
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Services, but deal with a somewhat different situation. There a property owner sued the
planning committee on the assertion that it inappropriately blocked construction on the
lot. Defendants won and requested attorney’s fees, which were awarded based on the
provision in some of the documents which stated: “In the event that it is necessary for
the [committee] to enforce the provisions of the [2002 architectural review manual] by
obtaining legal advice to clarify issues, initiate litigation, filing and/or preparing legal
documents or filing and preparing a Cease and Desist Order, then [the committee] shall
be entitled to recover its reasonable attorney fees and costs from the Performance
Deposit or other means as may be deemed necessary. Legal expenses above the
performance deposit may be recovered by fines assessed.”14
However, there was no attorney’s fees provision in the CC&Rs and the court
found that the Planning Committee did not have the power to bind the homeowners to
an attorney’s fee provision without their approval. Since nothing in the CC&Rs could be
used to assert that attorney’s fees were to be awarded in this type of litigation, the Court
of Appeal reversed the award of attorney’s fees.
The Court of Appeal found the language of International Billing Services to be too
broad. Citing to M. Perez Co., Inc. v. Base Camp Condominiums Assn. No. One,15the
Court stated:
We explained in Perez: “The fallacy of the rule stated in International Billing
Services is the assumption that if the party who claims that a contract allows fees
prevails in the underlying litigation, it gets attorney fees. In truth, the party must
still prove that the contract allows attorney fees. The mere allegation is not
enough.” (Perez, at p. 468.) The same applies for a losing plaintiff. For a losing
plaintiff to be required to pay attorney fees, the plaintiff's “bare allegation that [h]e
is entitled to receive attorney's fees [is] not … sufficient”; he also had to have
established the attorney fees clauses “actually entitled” him to recover fees.
(Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295, 1307 [230
14 Bear Creek Planning Committee v. Ferwerda, 193 Cal.App.4th 1178, 1182 (2011).
15 111 Cal.App.4th 456 (2003).
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Cal.Rptr. 553].) Here, [plaintiff] never so established, and as we have explained,
he could not so establish because the attorney fees provisions in the green book
and the 2002 architectural manual did not legitimately serve to add an attorney
fees provision to the CC&R's. Therefore, the [defendants] could not claim the
right to attorney fees simply because [plaintiff] had asked for those fees in his
complaint.16
In the Third Amended Complaint, the Plaintiff prays for “attorneys’ fees if and as
provided by law” on all claims for relief.17 This is not the specific kind of language that
would fit under either the International Billing Services or the Bear Creek test. So
judicial estoppel does not apply.
Sanctions under Federal Law
However the Court is not limited to the law of California, but can look to the
purposes of the Bankruptcy Code, the Federal underpinnings of FRBP 7054 and the
federal courts’ inherent power to award sanctions. As the Supreme court held in
Chambers v. NASCO, Inc., “[A] court may assess attorney’s fees when a party has
‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’”18
There are several cases which discuss imposing attorney’s fees when the
Trustee is embroiled in litigation for what appears to be bad faith or oppressive conduct.
In Vaniman the bankruptcy court awarded fees to the trustee both under the New York
law dealing with fraudulent transfers and also because it felt that merely undoing the
fraudulent transfers was not enough since the losing party had forced the trustee into
extended litigation to establish that the trustee had a right to liquidate the debtor’s
assets. The award of fees was also necessary as a deterrent to others who would deal
16 Id., at 1187.
17 Adversary Proceeding, doc. 107, §44.
18 501 U.S. 32, 46 (1991)(citations omitted).
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in such unnecessary litigation at the expense of the estate.19 Roco involved the
trustee’s objection to claims where the underlying basis of the claims had been
previously set aside and avoided as fraudulent transfers by the Bankruptcy Court, the
Bankruptcy Appellate Panel, and the First Circuit Court of Appeal. Following the
reasoning in Vaniman, the court held that
the present litigation is being pressed mainly for the purpose of taking yet
another bite at an apple which Consove consumed long ago, and has served
only to further delay the distribution of assets to creditors and to reduce their
recovery, to the extent of the cost of this most recent litigation. In fairness,
Edward Consove should bear some portion of the trustee's attorney's fees
incurred in defending against the allowance of claim 69. The legal expense of
this litigation expense should not be borne fully by creditors.20
In re Kellar analyzed the use of FRBP 7054 to award attorney’s fees as costs
and the cases to date and noted that
Similarly, Bankr.R. 7054(b), the more permissible bankruptcy analogue to
Fed.R.Civ.P. 54(d), does not generally encompass an award of attorney's fees
absent exceptional circumstances demanding equitable redress, since "costs are
merely court costs incurred from the filing of the proceeding." [citations
omitted].21
The more recent case of Lee v. American Student Assistance Agency accepted
the standard articulated in Vaniman, Keller, and Roco, but found that the facts of the
Lee case did not amount to egregious conduct which was sufficient to base an award of
attorney’s fees.22 And this same standard was employed by the Eighth Circuit
Bankruptcy Appellate Panel in Seimer v. Nangle, which used the general test articulated
in Chambers of conduct that was vexatious, wanton, or oppressive.23 This test is still in
use and when the court has found that a party acted in bad faith, attorney’s fees have
19 Pirrone v. Toboroff (In re Vaniman), 22 B.R. 166, 194 (Bankr. E.D.N.Y. 1982).
20 In re Roco Corp., 37 B.R. 770, 775 (Bankr. R.I., 1984).
21 In re Kellar, 125 B.R. 716, 719 (Bankr. N.D.N.Y., 1989).
22 Lee v. American Student Assistance Agency (In re Lee), 239 B.R. 9 (Bankr. C.T., 1999).
23 Seimer v. Nangle (In re Nangle), 281 B.R. 654, 658 (8th Cir. BAP, 2002).
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been awarded.24
In Gomez v. Vernon the Ninth Circuit has developed this test as follows:
A court has the inherent power to sanction a party or its lawyers if it acts in "willful
disobedience of a court order … or when the losing party has acted in bad faith,
vexatiously, wantonly, or for oppressive reasons," as well as for "willful[] abuse
[of the] judicial processes." Roadway Express, Inc. v. Piper, 447 U.S. 752, 766,
65 L. Ed. 2d 488, 100 S. Ct. 2455 (1980) (internal citations and quotations
omitted); see also Chambers v. NASCO, Inc., 501 U.S. 32, 46-47, 115 L. Ed. 2d
27, 111 S. Ct. 2123 (1991) (where litigant "engaged in bad faith or willful
disobedience of a court's order," inherent power "extends to a full range of
litigation abuses"). We review a court's imposition of sanctions for abuse of
discretion. See Chambers, 501 U.S. at 55 (inherent power). We recently
addressed the appropriate basis for an award of sanctions under a court's
inherent authority in Fink v. Gomez, 239 F.3d 989 (9th Cir. 2001). We held that
Roadway and Chambers require that inherent-power sanctions be preceded by a
finding of bad faith, or conduct tantamount to bad faith. Id. at 993. Under this
standard, although recklessness, of itself, does not justify the imposition of
sanctions, sanctions are available when recklessness is "combined with an
additional factor such as frivolousness, harassment, or an improper purpose." Id.
at 994. Sanctions, then, are justified "when a party acts for an improper purpose-
even if the act consists of making a truthful statement or a non-frivolous
argument or objection." Id. at 992 (emphasis in original).25
The Plaintiffs recklessly continued to keep the Trustee embroiled in the Katiraie
litigation and cannot articulate a proper purpose for doing so. It is totally clear that the
Trustee was not challenging Plaintiff’s assertion that he had an ownership interest in the
Corona Center and there was no reason for the Trustee to care since whatever interest
the estate had (be it 100% or 0% or anything in between) was sold and transferred by
the Sale Order. Even if the Trustee stipulated that Katiraie had his claimed interest, if
would have no effect on the litigation against the real parties in interest, who were
United and Radnet (the buyer under the Sale Order and the later transferee of the
Corona Center). Thus naming the Trustee and then fighting to keep him as a party
(there had been two motions to dismiss by the Trustee which were opposed by the
Plaintiff) was a frivolous litigation tactic, was oppressive, and had real negative results
24 For example, see Fluor Enters. V. Orion Ref. Corp (in re Orion Ref. Corp.), 372 B.R. 688, 704 (Bankr. DE, 2007).
25 255 F.3d 1118, 1133-1134 (9th Cir. Idaho 2001).
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to the professionals and other creditors of the estate who would be forced to bear the
cost of the fees expended by the Trustee in his defense. And this amounts to bad faith.
As to the monies allegedly owed prior to the sale, Katiraie could have and should
have simply filed an administrative claim and thus the burden to go forward would have
shifted to the Trustee. Once again this was oppressive and bad faith behavior on his
part.
Amount of Fees
As to the amount of the fees, this has been a horribly handled case by the
attorney(s) for the Plaintiff. While they do not bear the sole blame for the excessive
litigation that has occurred, they are responsible for the majority of it. The discovery
was so badly done that I have had to appoint outside attorneys to be present so that
depositions could be concluded.
Even though it was clear that the Trustee held no money that could be claimed
by Katiraie even if he were to prevail against United and Radnet, Plaintiff insisted on
keeping the Trustee as a defendant in this case. The Trustee initially sought to be
dismissed on the theory of implied judicial immunity, but was unsuccessful. Therefore I
will not grant fees as to that motion and am thus reducing the requested fees by
$6,725.50.
As to the items objected to by the Plaintiff, the court agrees with very few of
them. However there does appear to be some duplication due to the fact that multiple
attorneys worked on this case at the same time. I will reduce the fees requested by
$5,000 to compensate for this.
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I am hereby allowing fees to the Trustee in the total amount of $105,203.50 and
costs of $383.
###
United States Bankruptcy Judge
DATED: July 27, 2012
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This form is mandatory. It has been approved for use by the United States Bankruptcy Court f or the Central District of California.
June 2012 F 9021-1.1.NOTICE.ENTERED.ORDER
NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify): ORDER GRANTING
DEFENDANT CHAPTER 7 TRUSTEE DAVID GOTTLIEB’S MOTION FOR AN
AWARD OF ATTORNEY’S FEES OF $105,203.50
AND COSTS OF $383.00_______________________
was entered on the date indicated as AEntered@ on the first page of this judgment or order and will be
served in the manner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) B Pursuant to controlling
General Orders and LBRs, the foregoing document was served on the following persons by the court via
NEF and hyperlink to the judgment or order. As of (date)________________, the following persons are
currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive
NEF transmission at the email addresses stated below.
Steven Gubner Email: sgubner@ebg-law.com
Richard Burstein Email: rburstein@ebg-law.com
Martin Rudoy Email: marty@rudoylaw.com
Steven Fox: emails@foxlaw.com
Beth Ann Young Email: youngbry@lnbyb.com
Mark L Share Email: mshare@dwclaw.com
Holly Roark Email: holly@roarklawoffices.com
Daniel Lev Email: dlev@sulmeyerlaw.com
Yi S. Kim Email: ykim@greenbass.com
David Gottlieb Email: dkgtrustee@crowehorwath.com
Martin Brill Email: mjb@lnbrb.com
Wayne S. Ball Email: wball@greenbass.com
Michael Abrams Email: mabrams@wolfgroupla.com
Service information continued on attached page
2. SERVED BY THE COURT VIA UNITED STATES MAIL: A copy of this notice and a true copy of this
judgment or order was sent by United States mail, first class, postage prepaid, to the following persons
and/or entities at the addresses indicated below:
Moosa Heikali
830 Princeton Street
Santa Monica, CA 90403-2218
Nato Fund Inc.
c/c Bruce Yasmeh
7324 N. Sepulveda Blvd.
Van Nuys, CA 91405
Service information continued on attached page
3. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment
or order which bears an AEntered@ stamp, the party lodging the judgment or order will serve a complete
copy bearing an AEntered@ stamp by United States mail, overnight mail, facsimile transmission or email
and file a proof of service of the entered order on the following persons and/or entities at the addresses,
facsimile transmission numbers, and/or email addresses stated below:
Service information continued on attached page
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