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United States v. Larchwood Gardens Inc.

decided: January 21, 1970.

UNITED STATES OF AMERICA
v.
LARCHWOOD GARDENS, INC., LARCHWOOD GARDENS, INC. (DEFENDANT) AND JOHN A. ROBBINS CO., INC., CREDITORCLAIMANT, APPELLANTS



Maris, Seitz and Stahl, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

SEITZ, Circuit Judge.

Larchwood Gardens, Inc. (corporation) and John A. Robbins, Co. (Robbins), its sole stockholder, appeal a judgment of the district court awarding additional fees and expenses to the court- appointed receivers, attorney and accountant for the corporation.

The receivers, who are the appellees, were appointed by the district court in an action brought by the United States when the corporation defaulted on its federally insured mortgage loan. In due course the receivership affairs were completed and the receivers presented their final accounting and a petition for distribution seeking, inter alia, compensation for themselves, their attorney and their accountant. The exceptions by the corporation and Robbins to the amounts of compensation requested were overruled and the receivers' petition was granted. On appeal this court vacated the order of the district court and remanded for entry of orders incorporating the fees and allowances which we approved. The receivers' fees were reduced by almost 64%, the attorney's by over 40% and the accountant's by over 26%.*fn1 United States v. Larchwood Gardens, Inc., 404 F.2d 1108 (1968).

On remand the receivers presented the district court with a supplement to their final accounting which was in conformity with this court's mandate except that supplemental compensation for services performed by them and their agents after the appeal, expenses on appeal and interest on the approved allowances were claimed. The exceptions of the corporation and Robbins were overruled by the district court in an unreported opinion. This appeal followed.

We first consider appellants' contention that the additional compensation of $250.00 allowed each receiver and $500.00 allowed their attorney for services in the district court cannot be justified. The district court supported its action on the following basis:

"The amounts requested are de minimus when we consider what is involved, the amount recovered for the estate by the Receivers and counsel, which was nothing short of a 'windfall', due to their continuous and vigorous efforts. We cannot lose sight of the fact as originally found by us that the Government has recovered almost $200,000.00 from a real estate promotion scheme on the part of the exceptants after it appeared to be a hopeless loss."

The district court's supplemental awards appear to be based solely on the value of services already fully considered and evaluated by this court on the prior appeal. It follows that these supplemental allowances cannot be justified if we limit ourselves to the grounds articulated by the district court.

The receivers and their attorney actually seek to justify the additional fees on the ground that compensable services were performed after the remand which were not contemplated by the original award. Since this ground could justify granting such fees, we turn to an examination of the record made after the remand. The receivers and their attorney set forth the nature of their services in their Petition to Award Distribution:

"The additional service of the Receivers consisted of the following: Three telephone calls between the Receivers and their Attorney. Conference and consultation re the Opinion of the U.S. Circuit Court of Appeals, dated December 12, 1968. Conference and discussion re Petition and Order to be filed. The additional service of James H. McHale as Attorney, consisted of the following: Visit to the Clerk of the Circuit Court of Appeals and securing copy of Opinion of December 12, 1968. Preparing additional copies and sending to persons interested. Nine telephone calls to Receivers, Robert A. O'Connell & Co., Accountant. Letters to Accountant and Receivers. Preparation of Petition and Order to award distribution. Allowance of petition and service of the same, etc." (Petition to award distribution).

In their answer to the petition, the appellants demanded proof of the alleged services. However, at a hearing held thereafter the appellants' counsel stated that he did not think there were any facts in dispute but only questions of law were involved. In these circumstances we think it was proper for the district court to infer that no evidence was to be offered and that he was free to decide the matter on the record and briefs.

Initially, we think that the alleged services may have been encompassed by the previous award. In any event, we have carefully considered this sparse record and do not find a sufficient evidentiary base for an intelligent evaluation of the alleged services. The receivers and their attorney must do more than simply claim compensation. They must justify their claims. Such justification was not shown in this instance. Indeed, we think it not unreasonable to infer from this record that the additional "services" consisted largely of post mortem discussions concerning this court's prior decision. The allowances of additional fees to the receivers and their attorney in the district court cannot be sustained.

The appellants next attack the $600.00 additional compensation allowed the accountant for the receiver. The allowance was presumably based on the value of services rendered after this court's remand. We have examined the statement of the services rendered subsequent to the first appeal.*fn2 When it is considered with the receivers' prior petition and this court's earlier opinion, it is clear that these services were substantially included in the earlier request for compensation ...


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