4 ABR 150
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA
|
In re 4M 2B INVESTORS, an Alaska General Partnership; DAPHNE McLANE; SUSAN McLANE; LINDA McLANE; M. SCOTT McLANE; MICHAEL McLANE; STAN A. McLANE; STANLEY S. McLANE; and MARIA VICTORIA McLANE, |
Case No. A94-00623-HAR; A94-00623-HAR; A95-00011-HAR; A95- 00012-HAR; A95-00013-HAR; A95- 00014-HAR; A95-00015-HAR; A95- 00016-HAR; A95-00017-HAR Chapter 11 Jointly Administered Debtors |
|
HERMAN STENGA and JANET L. STENGA, Plaintiffs v. 4M 2B INVESTORS, an Alaska General Partnership, Defendant |
ADV PROC NO A94-00623-001-HAR (BANCAP No. 94-3122) ORDER DENYING ATTORNEY FEES AND |
For the reasons stated in the following Memorandum, IT IS ORDERED that the motion for attorney fees is DENIED and no attorney fees are awarded to plaintiffs. Defendant's objection to the costs as being per se barred is overruled, and plaintiffs may submit their cost bill to the clerk.
A hearing was held on October 3, 1995, regarding the award of attorney fees and costs to the Stengas for their defense of this adversary proceeding.
1. ATTORNEY FEES - The court determined that the issues involved
in this case revolved principally around the interpretation of whether
the Stenga ground lease was a lease or executory contract as defined by
federal law, 11 USC § 365. This issue is principally one of federal
bankruptcy law. Attorney fees are generally not allowed to successful
counsel in a case decided on federal law. In re Fobian, 921 F2d 1149,
4 ABR 151
1153 (9th Cir 1991) and In re Coast Trading Co, 744 F2d 686, 693 (9th Cir
1984). Compare, In re Bybee, 945 F2d 309, 315 (9th Cir 1991) ("state law
governs an award of attorney fees if state law and not federal bankruptcy
law provides the rule of decision in a contested matter"). See, Wright,
Miller & Kane, Federal Practice and Procedure: Civil 2nd § 2675 (West
Publ 1995).
Although the Stengas have argued that the position of 4M 2B was frivolous, I did not find that to be the case. Although no cases cited indicated that a long-term ground lease was per se akin to a security interest, the fact that the Stengas and 4M 2B used a consumer price index as a rent escalation clause raised a serious question as to whether the transaction should be treated as a secured interest as opposed to a ground lease.
Though I found that the use of the CPI as a rent escalation criterion has some deficiencies in establishing the fair rental value of the property, I held that this was not sufficient to require restructuring the transaction into a security situation as opposed to an unexpired lease. Other trial judges may have decided this legal issue the other way.
The plaintiffs' application for $106,268.21 attorney fees is denied.
2. COSTS - 4M 2B also challenges the award of costs of $17,683.76. Fobian at 1153 did deny costs at the trial level (but, not on appeal), possibly equating the American Rule regarding attorney fees to other costs of litigation. There was no analysis supporting this result, and I doubt this can be considered a "holding" which is binding on lower courts. The leading case, Alyeska Pipeline Service Co. v Wilderness Society, 421 US 240 (1975), discussed the American Rule as it applied to attorney fees only and did not allude to other costs being disallowed. FRCivP 54(d) and FRBP 7054 imply that costs, other than attorney fees, may be allowed to the prevailing party. The court will allow such costs as taxed by the clerk which are not challenged on their merits. Plaintiffs should arrange for a cost bill hearing.