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Brick v. HSBC Bank USA

United States District Court for the Western District of New York

August 11, 2004, Decided

04-CV-0129E(F)

Opinion

MEMORANDUM and ORDER

 [*2]  On July 25, 2003 Judge Michael J. Kaplan of the United States Bankruptcy Court for the Western District of New York ("Bankruptcy Court") sanctioned Leech Tishman Fuscaldo & Lampl, LLC ("LTFL"), the Trustee's attorneys, pursuant to the court's inherent power for discovery-related violations. In an Order dated January 8, 2004, Judge Kaplan awarded fees and expenses in the amount of $ 147,635.74 to Appellees, Gioia Management, Inc., Anthony Gioia and Richard Gioia (collectively the "Gioia Defendants"). LTFL appealed the sanction and award to this Court on January 20, 2004. Oral arguments were heard and this matter was submitted on May 28, 2004. For the reasons set forth below, the Bankruptcy Court's sanctions and fee award are affirmed.

On December 15, 1999 Corson Manufacturing Company ("Corson") filed a voluntary petition for Chapter 11 protection in the Bankruptcy Court. The appointed creditor's committee ("Committee") was subsequently authorized to retain LTFL as its counsel and Parente Randolph LLC ("Parente") as its accounting consultants. Parente filed a detailed fee application ("Fee Application") in November 2000 for its services to the Committee. 2 [*4]  The Committee filed an adversary [*3]  proceeding ("Adversary Proceeding") against, inter alios, the Gioia Defendants on December 12, 2000. 3 The Complaint therein asserted, inter alia, twenty-four counts against the Gioia Defendants including four non-core claims 4 based on an alleged pre-petition breach of fiduciary duty. On February 27, 2001 the Gioia Defendants filed a motion to withdraw the Adversary Proceeding from the Bankruptcy Court to this Court pursuant to 28 U.S.C. § 157(d). 5 In an Order dated June 26, 2001, this Court denied the Gioia Defendants' request but modified the Referral Order so as to permit the Bankruptcy Court to continue to preside over the Adversary Proceeding until such time as the non-core issues raised in the Complaint are ready to be determined by this Court by trial or by dispositive motion. On March 9, 2001 the Chapter 11 proceedings were converted to Chapter 7 liquidation proceedings. Daniel E. Brick, the appointed trustee ("Trustee"), 6 was subsequently authorized to retain LTFL as its counsel.

The Gioia Defendants served a discovery request on the Committee for production of documents on September 19, 2001. The [*5]  Gioia Defendants maintained that the request encompassed all Parente documents pertaining to its work done for the Committee as detailed in the Fee Application. 7 LTFL responded in December of 2001, but did not reference documents from Parente. In a series of letters and telephone conversations with LTFL, the Gioia Defendants asserted that the Parente documents were within the scope of their September 2001 discovery request.

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2004 U.S. Dist. LEXIS 16196 *; 43 Bankr. Ct. Dec. 135

DANIEL BRICK, as Chapter 7 Trustee, Appellant, -vs- HSBC BANK USA, successor in interest to Marine Midland Bank, GIOIA MANAGEMENT, INC., PHILLIPS, LYTLE, HITCHCOCK, BLAINE, AND HUBER, LLP, ANTHONY GIOIA, both individually and as an Officer, Director and/or Shareholder of Gioia Management, Inc., RICHARD GIOIA, both individually and as an Officer, Director and/or Shareholder of Corson Manufacturing Company and as an Officer, Director and/or Shareholder of Gioia Management, Inc., and ROBERT MICHAEL GREENE, both individually and as an Officer, Director and/or Shareholder of Corson Manufacturing Company and as an Officer, Director and/or Shareholder of Gioia Management, Inc. and as the Chief Executive Officer of Phillips, Lytle, Hitchcock, Blaine and Huber, LLP, Appellees.

Prior History:  [*1]  (99-BK-16855K).

Disposition: Affirmed.

CORE TERMS

documents, sanctions, discovery, inherent power, Defendants', depositions, bad faith, production of documents, contends, expenses, fee application, admonitions, timeline, withheld, argues

Bankruptcy Law, Judicial Review, Standards of Review, Abuse of Discretion, Civil Procedure, Appeals, Procedural Matters, General Overview, Clear Error Review, Sanctions, Clearly Erroneous Review, Remedies, Costs & Attorney Fees, Discovery & Disclosure, Discovery, Misconduct During Discovery, Governments, Courts, Authority to Adjudicate, Misconduct & Unethical Behavior, Court Personnel, Attorney Fees & Expenses, Reasonable Fees