Case 3:10-bk PMG Doc 1084 Filed 02/13/12 Page 1 of 5 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION

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1 Case 3:10-bk PMG Doc 1084 Filed 02/13/12 Page 1 of 5 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION In re: LYDIA CLADEK, INC., Debtor. / CASE NO bk PMG Chapter 11 OBJECTION TO ANITA SPRING'S MOTION TO TAX ATTORNEY'S FEES AND COSTS, OR IN THE ALTERNATIVE, MOTION TO TAX ATTORNEY'S FEES Terry J. Soifer (the "Creditor Agent"), not individually but as Creditor Agent for the Cladek Creditors Trust ("Plaintiff" or "Cladek Creditor Trust"), hereby objects to the Motion to Tax Attorney Fees and Costs (Doc. No. 1064) (the "Motion"), or in the alternative, requests the Court to award attorney's fees to the Creditor Agent, in the event the Creditor is the prevailing party in prosecuting its Claim Objection, and in support thereof states as follows: 1. On February 6, 2012, Spring filed the Motion pursuant to Federal Bankruptcy Rules of Procedure 7054 and 9014(c). In the Motion, Spring requests an award of attorney's fees and costs incurred in defending the Creditor Agent's Claim Objection. 2. Federal Rule of Bankruptcy Procedure 7054 allows an award of "costs" to the prevailing party, but does not incorporate Rule 54(d) of the Federal Rules of Civil Procedure, which specifically provides for an award of attorney's fees in non-bankruptcy civil cases. 3. Subsection (b) of Federal Rule of Bankruptcy Procedure 7054 is the bankruptcy analogue to Rule 54(d) of the Federal Rules of Civil Procedure, but "does not generally encompass an award of attorney's fees absent exceptional circumstances." In re Kellar (Members Credit Union v. Kellar), 125 B.R. 716 (Bankr. N.D.N.Y 1989); see also In re Celotex Corp., 251 B.R. 163, 169 (Bankr. M.D. Fla. 2000) (holding that "costs" awarded under Bankruptcy Rule 7054(b) include only those costs enumerated in 28 U.S.C "unless the v1

2 Case 3:10-bk PMG Doc 1084 Filed 02/13/12 Page 2 of 5 prevailing party can show it is entitled to an award of costs pursuant to another Bankruptcy Code section"). 4. Generally, a prevailing party is not entitled to an award of attorney's fees except as provided by statute or an enforceable contract between the parties. Travelers Casualty & Surety Company of America v. Pacific Gas and Electric Company, 549 U.S. 443, 448 (2007); In re Martinez, 416 F.3d 1286, (11th Cir. 2005). 5. Therefore, absent a showing of exceptional circumstances, or a statutory or contractual basis for attorney fees, Spring is not entitled to an award of attorney's fees as a prevailing party. 6. Spring asserts that she is entitled to an award of attorney's fees "independent of Rules 7054 and 9014(c), and pursuant to the Promissory Notes," which state: "If any payment under this Note is not paid when due, the Promisor promises to pay all costs of collection, including reasonable attorney fees, whether or not a lawsuit is commenced as part of the collection process." However, in this case, attorney fees incurred in relation to defending the Creditor Agent's Claim Objection pertain only to establishing whether the claim is secured or unsecured. 1 Therefore, Spring will incur no costs or fees in the Claim Objection proceeding related to "collection" of her claim against the bankruptcy estate, the payment of which is already set forth in the Confirmation Order. 7. Furthermore, the attorney's fees must be reasonable. Spring briefed the issue of whether the filing of the bankruptcy cut off the post-petition rights of Spring to a security interest 1 In its papers filed in this contested matter, and in the Amended Plan confirmed by this Court, the Creditor Agent has already conceded that Spring has a secured claim in proceeds that remained perfected prior to the petition date, and in any proceeds generated post-petition from the Note Collateral, and an unsecured claim for the remaining portions of Spring's claim. Spring's claim will be paid by the Creditor Agent according to its treatment in the confirmed Amended Plan v1 2

3 Case 3:10-bk PMG Doc 1084 Filed 02/13/12 Page 3 of 5 in proceeds of the Note Collateral, and included such briefing and related arguments in her Pretrial Memorandum in Opposition to the Creditor Agent's Second Amended Objection to Claim No of Anita Spring (Doc. No. 1065) filed on February 6, To the extent that Spring incurred fees in briefing this issue, such fees were not reasonable because the Creditor Agent had already withdrawn its objection on those grounds in its Supplement to Second Amended Objection to Claim #237-2 of Anita Spring (Doc. No. 1040) filed on February 1, In the alternative, if the Court finds that Spring is entitled to attorney's fees based on the above-referenced contractual provision, in the event Spring is the prevailing party, then the Creditor Agent is also entitled to an award of attorney's fees pursuant to Florida's statutory reciprocal attorney's fee provision in the event that the Creditor Agent is the prevailing party, pursuant to section (7) of the Florida Statutes, which provides as follows: If a contract contains a provision allowing attorney s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. See In re Martinez, 416 F.3d at 1288 (holding that Florida reciprocal attorney's fee statute applies in dischargeability proceedings to allow an award of attorney's fees to a prevailing debtor); In re Jerk Machine, 422 B.R. 327, 331 (Bankr. S.D. Fla 2010) (holding that Florida's reciprocal attorney's fee statute also applies to a prevailing debtor in recovering a fraudulent transfer made pursuant to the contract containing the fee provision). "Florida law says that you cannot have [a] one-sided attorney's fee contract provision." Martinez, 416 F.3d at WHEREFORE, the Creditor Agent requests this Court to enter an order: (i) denying Spring's Motion to Tax Attorney's Fees and Costs to the extent it requests an award of attorney's fees; or (ii) in the alternative, awarding the Creditor Agent attorney's fees in the event it is the v1 3

4 Case 3:10-bk PMG Doc 1084 Filed 02/13/12 Page 4 of 5 prevailing party; and (iii) granting such other and further relief as the Court deems just and proper. Dated this 13th day of February, Respectfully submitted, /s/ Jon E. Kane Jon E. Kane, Esq. Florida Bar No Burr & Forman, LLP 200 S. Orange Avenue, Suite 800 Orlando, FL Telephone: (407) Fax: (407) jkane@burr.com ATTORNEYS FOR THE CREDITOR AGENT v1 4

5 Case 3:10-bk PMG Doc 1084 Filed 02/13/12 Page 5 of 5 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I caused a true and correct copy of the foregoing Response to be served using the Court's CM/ECF system, , and/or via U.S. Mail on February 13th, 2012, to Richard Thames, Esq., 50 N. Laura Street, Suite 1600, Jacksonville, Florida and Anita Spring, 5707 SW 17th Drive, Gainesville, FL /s/ Jon E. Kane Jon E. Kane, Esq v1 5