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Southern California Sunbelt Developer's Inc. v. Southern California Sunbelt Developers

July 15, 2009

IN RE: SOUTHERN CALIFORNIA SUNBELT DEVELOPER'S INC. TRAILS END LIMITED PARTNERSHIP, SHOWTHUNDER INC., HAMPTON LIMITED, ET AL., PLAINTIFF,
v.
SOUTHERN CALIFORNIA SUNBELT DEVELOPERS, INC., DEFENDANTS.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

ORDER GRANTING IN PART MOTION FOR ATTORNEYS' FEES AND DOUBLE COSTS

[Motion filed on February 5, 2009]

I. BACKGROUND

On January 23, 2002, thirteen petitioning creditors filed involuntary petitions under Section 303 of the Bankruptcy Code seeking to force IBT International, Inc. ("IBT") and Southern California Sunbelt Developers ("SCSD")(collectively, "Appellees") into involuntary bankruptcy proceedings. The petitions were signed by two individuals, David Tedder and Donald Grammer, on behalf of the thirteen petitioners. The bankruptcy court dismissed the involuntary petitions, and then both IBT and SCSD brought motions under Section 303(i) seeking recovery of attorneys' fees and costs and punitive damages. The bankruptcy court awarded attorneys' fees and costs and $65,000 in punitive damages against Appellants; and also sanctioned Tedder and Grammer for acting in bad faith (the "Bankruptcy Court Decision"). On August 21, 2008, this Court affirmed the Bankruptcy Court Decision in favor of Appellees (the "August 21 Order").

Following the affirmance of the Bankruptcy Court Decision, Appellees filed another motions for sanctions under Bankruptcy Rule 8020, alleging that the appeal was frivolous. On November 17, 2008, this Court granted in part Appellees' motion for sanctions (the "November 17 Order"). However, this Court also ordered Appellees to submit a noticed motion to determine what fees and costs were due, based on those issues the Court found to be frivolous.

Appellees have submitted their noticed motion*fn1 to determine fees, which this Court now considers.

II. LEGAL STANDARD

Under Bankruptcy Rule 8020, if an appeal from an order or judgment is "frivolous," then a court has discretion to award "just damages and single or double costs to the appellee." Fed. R. Bankruptcy P. 8020. The calculation of fees and costs under Rule 8020 is distinct from the analysis of reasonable fees and costs awarded to a "prevailing party" by statute, in that damages must only be "just." Sun-Tek Industries, Inc. v. Kennedy Sky-Lites, Inc., 865 F.2d 1254, 1255 (Fed. Cir. 1989). Rule 8020 is modeled after Federal Rule of Appellate Procedure 38, and cases examining Rule 38 guide the court in determining whether an appeal is frivolous under Rule 8020. In re Weinstein, 227 B.R. 284, 297 (9th Cir. BAP 1998) (citing to the Advisory Committee's Notes for Rule 8020). Further, the Ninth Circuit has analogized sanctions under Rule 38 to those under Federal Rule of Civil Procedure 11. Lyddon v. Geothermal Properties, 996 F.2d 212, 214 (9th Cir. 1993)("[T]he principles governing the interpretation of Rule 11 should control in interpreting Rule 38."). Sanctions awarded by the court must be sufficiently related or "'directly caused'" by the filing of the appeal. Id. (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990)). This excludes, for example, the costs associated with the filing of the motion for sanctions itself. Id.

Additionally, the trial court must provide adequate explanation for the appellate court to review an award of fees and costs, but "a brief explanation of how the court arrived at its figures will do." Cunningham v. County of Los Angeles, 879 F.2d 481, 484 (9th Cir. 1988); see also In re Yagman, 796 F.2d 1165, 1185 (9th Cir.), amended, 803 F.2d 1085 (9th Cir. 1986) (finding that a sanctions award must be "quantifiable with some precision and properly itemized").

III. DISCUSSION

A. Costs and the Motion for Sanctions

Single costs have already been awarded to Appellees and may not be re-awarded without providing double costs. The Court declines to award double costs here or to increase the costs which have already been awarded, as not all of Appellants' appeal was frivolous. Additionally, as noted above, fees and costs may not be awarded for the prosecution of a motion for sanctions, Lyddon, 996 F.2d at 214, and the Court will therefore not consider these amounts in its calculation.*fn2

B. Motions for Attorneys' Fees

1. Percentage of Fees related to Frivolous ...


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