Court Opinion

ID: 5121293
Source: CourtListenerOpinion
Date Created: 2021-10-26 20:01:07.905321+00
Date Added: 2024-06-11T08:22:21.888904
License: Public Domain

NOT FOR PUBLICATION                         FILED
                    UNITED STATES COURT OF APPEALS                       OCT 26 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

FANN CONTRACTING, INC.,                         No.    20-16497

                Appellant,                      D.C. No. 2:19-cv-00716-GMN

 v.
                                                MEMORANDUM*
GARMAN TURNER GORDON LLP;
BRIAN D. SHAPIRO, Chapter 11 Trustee,

                Appellees.

                   Appeal from the United States District Court
                            for the District of Nevada
                   Gloria M. Navarro, District Judge, Presiding

                             Submitted October 22, 2021**
                               San Francisco, California

Before: WATFORD and HURWITZ, Circuit Judges, and BAKER,*** International
Trade Judge.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      ***
             The Honorable M. Miller Baker, Judge for the United States Court of
International Trade, sitting by designation.
                                                                          Page 2 of 4

      Fann Contracting, Inc., contests the 35% contingency fee awarded to

Garman Turner Gordon LLP (GTG) after finalization of a $1.75 million settlement

in bankruptcy court. The district court affirmed the bankruptcy court’s fee award,

and Fann now appeals from that decision. We have jurisdiction under 28 U.S.C.

§§ 158(d)(1) and 1291, and we affirm.

      1. The bankruptcy court did not abuse its discretion in calculating the

contingency fee based on the full $1.75 million settlement payment. The fee

agreement between GTG and the Trustee states that the contingency fee will be

calculated based on all sums “recovered, held or distributed” by the estate, and

here the terms of the settlement resulted in a $1.75 million payment to the estate.

It is true, as Fann notes, that $900,000 of the estate’s recovery was immediately

paid to the Canyon Rock Parties as an allowed secured claim. But that payment

was one component of a global settlement that resolved the Canyon Rock Parties’

disputed secured claim of $4.5 million against the estate. The settlement also

extinguished several ongoing litigation claims against the estate. Given these facts,

the bankruptcy court permissibly viewed the full $1.75 million settlement payment

as the amount “recovered” and “distributed by” the estate for purposes of

calculating the contingency fee. See In re Rifino, 245 F.3d 1083, 1088 (9th Cir.

2001) (“Where there are two permissible views of the evidence, the factfinder’s
                                                                           Page 3 of 4

choice between them cannot be clearly erroneous.”) (quoting Anderson v. City of

Bessemer City, N.C., 470 U.S. 564, 574 (1985)).

      2. The bankruptcy court did not award GTG fees under the lodestar method,

but instead based the fee award on the agreed-upon contingency rate of 35%. The

court merely used a lodestar calculation as one of several factors in determining

whether the 35% contingency fee requested by GTG was reasonable under 11

U.S.C. § 330(a). In making that determination, the court properly gave significant

weight to other factors, such as the difficulty of the case, the surprisingly favorable

results obtained, the substantial risk GTG shouldered that no recovery would be

obtained at all, and the quality of GTG’s representation throughout the litigation.

Any error by the bankruptcy court in calculating the lodestar amount did not taint

its overall reasonableness determination.

      3. The bankruptcy court was not required to reduce the fee award simply

because no funds remained to pay unsecured creditors under the settlement

agreement. The text of the relevant statute requires a holistic, multi-factor analysis

that focuses on benefits to the estate, not to any one class of creditors. See 11

U.S.C. § 330(a). The bankruptcy court did not clearly err in finding that the

settlement generated substantial benefits for the estate, given that the estate had

few if any liquid assets prior to the litigation initiated by GTG. The court also

found that, even as to the unsecured creditors, GTG’s work proved modestly
                                                                         Page 4 of 4

beneficial. The court credited GTG for reaching a comprehensive settlement that

reduced the unsecured creditor pool by $13 million, which indirectly facilitated a

$200,000 distribution to the unsecured creditors, including Fann.

      AFFIRMED.