In re Cepero

DO NOT PUBLISH

Chapter 13

Michael Brooks, Esq. Miguel Parlade, Esq.

ORDER ON SANCTIONS AND SETTING FURTHER EVIDENTIARY HEARING

Laurel M. Isicoff, Chief United States Bankruptcy Judge

This matter came before the Court after a trial on February 26, 2020 and February 11-12, 2021 on the Debtors' Motion For Contempt Against Hammocks Community Association Inc., and it's [sic] President, Marglli Gallego for Failure to Abide by This Court's Agreed Order Dated December 3, 2019, [ECF 189] and This Court's Order Dated December 6, 2018, [ECF 191] on the Debtors' Amended Motion

for Contempt Against Hammocks Community Association Inc., and it's [sic] President, Marglli Gallego (ECF #199) (the "2019 Contempt Motion") and Debtors' Amended Motion for Contempt Against Hammocks Community Association Inc., and it's [sic] President, Marglli Gallego for Failure to Abide by This Court's Agreed Order Dated December 3, 2019 [ECF 189] and This Court's Order Dated December 6, 2018, [ECF 191] on the Debtors' Amended Motion for Contempt Against Hammocks Community Association Inc., and it's [sic] President, Marglli Gallego (ECF #289) (the "Amended Contempt Motion" and together with the 2019 Contempt Motion, the "Contempt Motions"). The Court finds that the Debtors are entitled to sanctions in the form of attorney fees in the amount set forth below, and, if their evidentiary burden is met, in the form of damages for emotional distress. The Court also finds the Debtors are entitled to some punitive damages, the amount of which the Court cannot determine until after ruling on the request for damages relating to the alleged emotional distress. The Court finds the Debtors are not currently entitled to reimbursement of expenses because they failed to provide the required support ordered by the Court, and with respect to the attorney fees included in the request for costs, in addition to being inappropriately categorized as a cost, had no detail whatsoever.

The Court entered its ruling in favor of the Debtors on almost all of the relief requested in the Contempt Motions in its Order Finding Hammocks Community Association Inc. and Marglli Gallego in Contempt (ECF #328) (the

"Contempt Order")0F^[1], and directed the Debtors to submit a "specific request for damages, citing the support for the damages, whether by statute or common law, and the specific amount of damages requested for each category of damages." The Debtors filed their Statement of Damages on Order of Contempt (ECF #335) (the "Damages Statement") to which the Association1F^[2] and Ms. Gallego filed their Objection to Debtor's [sic] Statement of Damages on Order of Contempt (ECF #337) (the "Damages Objection").

The Debtors seek sanctions in the form of damages for the violations of this Court's Orders2F^[3] and for violation of the automatic stay. The Debtors also seek punitive damages. The Debtors rely on 11 U.S.C. §105 for the sanctions arising from the violation of the Court's Orders and on 11 U.S.C. §362(k) for damages arising from the stay violation.

Under section 105, "the court may take any action 'necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.' 11 U.S.C. § 105(a). Thus, a court may impose sanctions if a party violates a court order or rule." In re Evergreen Sec., Ltd., 570 F.3d 1257, 1273 (11th Cir. 2009). "The purpose of civil contempt sanctions is to (1) compensate

the complainant for losses and expenses it incurred because of the contemptuous act, and (2) coerce the contemnor into complying with the court order." Jove Eng'g, Inc. v. I.R.S., 92 F.3d 1539, 1557 (11th Cir. 1996).

Sanctions for a stay violation under section 362(k) may be awarded when the Court finds that the stay violation was willful. If so, the Debtors are entitled to "recover actual damages, including costs and attorney's fees, and, in appropriate circumstances, may recover punitive damages." 11 U.S.C. §362(k).

Attorney Fees

The Debtors seek sanctions in the form of attorney fees totaling $71, 830.00.3F^[4] The Association and Ms. Gallego object to the fees on a number of grounds including that there were no expert declarations attached to the Damages Statement. The Court will address this objection first. The use of expert testimony in federal court is governed by Federal Rule of Evidence 702. That rule states "[a] witness who is qualified as an expert by knowledge, skill, experience, training or education may testify on the form of an opinion or otherwise if: (a) the expert's scientific, technical or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue." As the Court has repeatedly advised parties who appear before her, and advised the parties in this case, the Court has 37 years of experience in the bankruptcy arena-over 20 years as a practitioner and over 15 years as a judge. The Court does not require an expert to advise the Court on the issue of the

reasonableness of attorney fees in a bankruptcy proceeding. Therefore, that portion of the Damages Objection is overruled.

The reasonableness of the fees requested by the Debtors is measured in accordance with the criteria set forth in Johnson v. Georgia Highway Exp., 488 F.2d 714 (5th Cir. 1974) as reaffirmed in Norman v. Housing Authority of the City of Montgomery, 836 F.2d 1292 (11th Cir. 1988). In re Lyubarksy, 615 B.R. 924, 934 (Bankr. S.D. Fla. 2020).4F^[5] Those factors are (i) the time and labor involved; (ii) the novelty and difficulty of the questions; (iii) the skill requisite to perform the legal service properly; (iv) the preclusion of other employment by the attorney due to acceptance of the case; (v) the customary fee; (vi) whether the fee is fixed or contingent; (vii) time limitations imposed by the client or the circumstances; (viii) the amount involved and the results obtained; (ix) the experience, reputation, and ability of the attorneys; (x) the "undesirability" of the case; (xi) the nature and length of the professional relationship with the client; and (xii) awards in similar cases.

The Court has reviewed the detailed fee statements for Mr. Brooks and for Mr. Arslanian attached to the Damages Statement. Having reviewed the statements in detail, the Court finds that Mr. Brooks' fees should be reduced to $26, 977.50 and allowed as a sanction only in that amount and that Mr. Arslanian's fees should be allowed in the amount requested - $27, 087.50.

The award of attorney fees as a sanction for violation of this Court's Orders and violation of the stay is designed to compensate the Debtors for the harm caused by the acts of the Association and Ms. Gallego. This does not mean that the Debtors are entitled to any attorney fees arising from the Debtors' relationship and dealings with the Association. Nonetheless, Mr. Brooks included in his fee request charges associated with the Debtors' alterations to their roof, front door, and driveway. None of those fees were appropriately included in his fee request.

The balance of the fee reduction is based primarily on collective excessive charges for tasks such as preparation of the closing statement and unnecessary duplication - primarily attendance at the deposition. Therefore, the Court finds that it is appropriate to sanction the Association and Ms. Gallego jointly and severally $54, 065.00 with respect to the attorney fee damages.

Costs

The Debtors also seek $11, 682.20 in costs, which include $2, 500.00 for attorney fees associated with work done by Mr. Brooks' former law partner Michael Frank in 2019, $5, 000.00 for attorney fees for Mr. Brooks in 2020, and $2, 500.00 for work done by Guy Spiegelman, identified...