Black v. Akins (In re Akins)

640 B.R. 687

IN RE Joseph H. AKINS, Debtor.

Dominique Black, Plaintiff,

v.Joseph H. Akins, Defendant.

Case No. 18-25001-E-7

Adv. Proc. No. 18-2187

Docket Control No. RLF-20

United States Bankruptcy Court, E.D. California.

Signed May 19, 2022

Office of the U.S. Trustee, Sacramento, CA, for Attorney for the Debtor.

Nicholas B. Lazzarini, Esq., Sacramento, CA, for Attorney for the Trustee.

MEMORANDUM OPINION AND DECISION DENYING MOTION FOR PREVAILING PARTY ATTORNEY'S FEES, SANCTIONS

Ronald H. Sargis, United States Bankruptcy Judge

Joseph H. Akins, Jr. ("Defendant") filed the Motion for Attorney Fees as in Support of Costs & as Allowed by Law ("Motion") seeking prevailing party fees in the amount of $275,500.00 pursuant to 11 U.S.C. § 523(d) ; Federal Rules of Civil Procedure 54(d) as incorporated into Federal Rules of Bankruptcy Procedure 7054 ; and 11 U.S.C. § 105(a). The Motion seeks to recover these amounts from Dominique Black, the Plaintiff in this Adversary Proceeding.¹

The Motion itself does not state the period Defendant is requesting fees for. After review of Defendant's Attorney's² Declaration, Sheila Gropper Nelson, Esq. (Dckt. 263), it appears it began with the filing of this adversary and throughout the course of litigation. However, Defendant has not provided a clear task billing analysis nor any exhibits evidencing Defendant's Attorney's time and billing records³ to establish the proper period of services provided in this Adversary. The Motion's evidentiary shortcomings are discussed below.

The Motion states that the fees are requested pursuant to Federal Rule of Civil Procedure 54(d) and Federal Rule of Bankruptcy Procedure 7054(b)(2). The basis for the attorneys’ fees is statutory, 11 U.S.C. § 523(d) and 11 U.S.C. § 105(a).

Court's February 3rd Order for Supplementary Pleadings

On February 3, 2022, the court issued an order requesting a supplemental pleading to Defendant's Motion be filed which states the grounds with particularity upon which the relief is based (as required by Fed. R. Civ. P. 7(b) and Fed. R. Bankr. P. 7007 ). Dckt. 292. The Motion itself merely stated that the Motion is brought pursuant to 11 U.S.C. § 523(d) and the inherent powers of the court, and is supported by the Points and Authorities filed herewith, supporting declarations and Bill of Costs filed with the Clerk of the Court. Motion, p. 2:1-5, 10-11; Dckt. 260. The court was concerned with the lack of grounds stated in Defendant's Motion, and if the court was tasked with "mining the pleadings" to identify possible grounds, the court could possibly inadvertently misstate the grounds Defendant (subject to the certifications under Federal Rule of Bankruptcy Procedure 9011 ) was deemed to be stating with particularity.

Defendant's Supplement

On February 14, 2022, Defendant filed a pleading titled "Supplemental Motion for Attorney's Fees as Costs & Allowed by Law. Dckt. 300 (The "Supplement"). The court interprets this to be the "supplement to the [existing] Motion (not an amended motion) which states the grounds with particularity upon which the requested relief is based." Order, Dckt. 292.

In the Supplement, Defendant states with particularity the grounds for this Motion for Prevailing Party Fees, which include:

A. "On Dec. 6, 2021, [Defendant] was determined by the Court to be the prevailing party after 5 days of trial. This Court found that [Plaintiff] had failed to sustain his burden of proof as to each cause of action and that Mr. Black lacked credibility. Supplement, p. 2:7-10; Dckt. 300."

B. "Mr. Black's adversary action sought to determine that his ‘alleged’ claim(s) were non-dischargeable under 11 U.S.C. § 523(a)(2), (a)(4) & (a)(6). Mr. Black had filed his pro se Complaint on November 13, 2018, and it was amended on April 4, 2019 (Doc. No. 21). After vigorous motion practice the Amended Complaint was answered on September 12, 2019 (Doc. No. 75). Mr. Black had obtained a default judgment against deceased debtor more than 8 ½ years before the petition had been filed in August, 2018." Id . at p. 2:12-16.

As noted in the Supplement, what Defendant frames as Plaintiff seeking "to determine that his ‘alleged’ claim(s) were nondischargeable" were actually obligations owing on a final judgment issued by the California Superior Court. There were no "alleged claims" being asserted, only an unassailable State Court Judgment.

What Defendant states as being a "vigorous motion practice" consisted of first a Motion to Dismiss by Defendant that was denied without prejudice for a failure to state with particularity any grounds for dismissal of the Complaint. Civil Minutes and Order; Dckts. 49, 51. The second part of the "vigorous motion practice" was a second Motion to Dismiss by Defendant. The court issued an order denying the second Motion to Dismiss, with the court concluding:

Contrary to Defendant's assertion that the above is not "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests," it clearly does. While Defendant may need to avail himself of his right to conduct discovery, it is clear what is alleged to have occurred.

Plaintiff took the Vehicle to NORCAL and Defendant to have it restored, with a time period specified in which this occurred. It is alleged that NORCAL is a business that Defendant owned or was associated with, and one in which Defendant obtained sole control over the lease for the property in which NORCAL did business.

The specific promises made by NORCAL and attributed to Defendant are alleged as to the restoration and customization work to be done, the monies paid in reliance on the promises made, and that the work was not done. It is further alleged what Defendant failed to do, personally and through NORCAL, in addition to the taking and use of the Vehicle for use by Defendant's brother.

Defendant is clearly on fair notice as to what the claim is based on, with whom Plaintiff communicated, what is alleged to have been said, and how it is attributed or stated to have been said by Defendant.

Civil Minutes, pp. 10-11; Dckt. 81. The court's Ruling on the second Motion to Dismiss concludes with:

While Defendant may dispute what is alleged, that is subject to evidence to be presented to the court. The First Amended Complaint sufficiently states the basis for the claims asserted, with the Defendant being on full, fair, and quite detailed notice of what is alleged. Defendant's "concerns" over identifying specific dates is the subject of good faith discovery. There are no naked assertions, or formalistic pleading of sterile legal grounds in the First Amended Complaint. The "facts" alleged are many, sufficient, and clearly provide a basis for Defendant to fairly know what is asserted, the claims made, and what he needs to address in asserting his defense.

The Motion is denied. Defendant shall file and serve his Answer on or before September 12, 2019.

Id . at p. 12. Order Denying Motion to Dismiss, Dckt. 82.

C. "[Plaintiff] engaged in numerous acts to increase the costs of litigation and to thwart discovery by [Defendant], identified in the supporting declarations and other papers previously filed with the Court." Supplement, p. 2:19-21; Dckt. 300.

D. "A significant portion of the fees sought relate to the time prior to and during trial that was required to deal with the redundant and irrelevant exhibits lodged by Mr. Black with the Court. [Plaintiff]’s counsel admitted both in the Omnibus Opposition to the limine motions and during oral argument at trial that there had been an absence of discretion in plaintiff's production of exhibits. (Doc. No. 233 Omnibus Opposition to Motions in Limine ) Significant time was required, prior to trial to deal with [Plaintiff's] repeated conduct to abuse the discovery process." Id . at pp. 2:24-27, 3:1-3.

E. "As a direct result of plaintiff's lodging of redundant and irrelevant trial exhibits, trial was continued for two additional days increasing the costs to defend the litigation. Trial concluded on December 6, 2021." Id . at p. 3:4-5.

F. "As reflected in Mr. Black's own testimony and despite his repeated assertion that he had 20,000 pages of materials to support his alleged ‘claims,’ he failed to meet his burden of proof." Id . at p. 3:6-7.

G. "The Court made oral findings from the bench on December 6, 2021 in favor of Mr. Akins Jr. on all causes of action and finding that Mr. Black lacked credibility." Id . at p. 3:10-12.

Defendant continues in the Argument section of the Supplement to state the following legal grounds for the requested relief.

H. "A prevailing party in an adversary action, brought under 11 U.S.C. § 523(a)(2), can move for attorney fees under 11 U.S.C. § 523(d)." Id . at p. 3:22-23.

I. "A court can disallow recovery of attorney fees under 11 U.S.C. § 523(d) if the creditor can demonstrate that the alleged ‘claim’ was substantially justified or if the Court determines that the alleged claim was either a ‘business’ debt or interstitial in nature." Id . at p. 4:1-4.

J. "This Supplemental Motion and the supporting papers move for the award requested on the grounds that the claim(s) by [Plaintiff] were not substantially justified; and that the alleged ‘claim’ was illusory and therefore does not fit neatly into the categories of ‘consumer’ ‘business’ or ‘interstitial’." Id . at p. 4:4-7.

K. "That [Plaintiff]’s conduct included a failure to file a claim in the underlying bankruptcy action, pursuit of the adversary with knowledge that the asserted claims would not be supported by admissible evidence as set forth in both the Court's findings from the bench and the final judgment, and the act of failing to exercise due diligence in the lodging of irrelevant and redundant exhibits for the trial, with knowledge that such conduct would and did increase the costs for defense of the litigation, justifies an award of attorney fees as requested." Id . at p. 4:9-14.

L.

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