In re John Richards Homes Building Company, L.L.C.

Citation:
Adell v. Honigman, Miller, Schwartz & Cohn, LLP (In re John Richards Homes Building Company, LLC), Case Nos. 12-2012, 12-2013, 12-2014, and 12-2015 (6th Cir. Nov. 20, 2013) (unpublished).
Tag(s):
Ruling:
The Sixth Circuit Court of Appeals held that (i) a bankruptcy court has the power to enter an award of attorneys' fees for enforcing a judgment entered under 11 U.S.C. § 303(i) and for collateral proceedings, and (ii) a bankruptcy court does not have statutory or inherent authority to impose serious noncompensatory punitive damages for post-judgment conduct.
Procedural context:
After dismissing an involuntary bankruptcy case, the Bankruptcy Court for the Eastern District of Michigan entered an order against Adell, the creditor who filed the initial involuntary bankruptcy petition, awarding attorneys' fees of $1,854,192.73 under 11 U.S.C. § 303(i) and punitive damages of $2.8 million for Adell's post-judgment conduct. On appeal, the District Court for the Eastern District of Michigan affirmed the award of attorneys' fees and reversed the award of punitive damages. Both parties appealed to the Sixth Circuit Court of Appeals. The Sixth Circuit affirmed the judgment of the District Court.
Facts:
On June 24, 2002 Adell filed an involuntary petition under 11 U.S.C. § 303(b)(2) against John Richards Homes Building Company, LLC ("JRH"). The bankruptcy court found that Adell filed the involuntary petition in bad faith and awarded compensatory damages, noncompensatory punitive damages, and attorneys' fees. While appealing the bankruptcy court's damages award, Adell liquidated his assets in Michigan and purchased a home in Florida for $2.8 million. Adell later filed for bankruptcy in Florida, resulting if further litigation. After the Sixth Circuit affirmed the bankruptcy court's original damages award, Adell paid the damages in full. JRH moved for an additional award of attorneys' fees and punitive damages resulting from Adell's post-judgment conduct. The bankruptcy court initially denied the motion, holding that § 303(i) did not permit an award of damages for post-judgment conduct. This ruling was reversed by the district court. On remand, the bankruptcy court awarded JRH $1,854,192.73 in attorney’s fees and $2.8 million in punitive damages.
Judge(s):
ROGERS, STRANCH, and DONALD

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