Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 1 of 9 Page ID#: 33333

Transcription

1 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 1 of 9 Page ID#: Paul R.J. Connolly, OSB # paul@connollypc.com Kevin J. Jacoby, OSB # kevin@connollypc.com 2731 Twelf St. SE PO Box 3095 Phone: (503) Fax: (503) Of Attorneys for. UNITED STATES DISTRICT COURT DISTRICT OF OREGON SECURITIES AND EXCHANGE COMMISSION, v. Plaintiff, SUNWEST MANAGEMENT, INC.; et al., Defendants. Case No.: HO PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL SUBMITTED BY THE LAW OFFICE OF PAUL R.J. CONNOLLY S ATTORNEYS FOR SUNWEST INVESTORS/THIRD PARTY CLAIMANTS By The ( Law Firm ) petitions is Court to award it attorney fees and costs wi respect to e settlements wi Davis Wright Tremaine ( DWT ), K & L Gates, Thompson & Knight, and various broker-dealers, in an amount to be determined by e Court. The Law Firm seeks compensation for legal services performed on behalf of Sunwest Investors pursuing eir Third Party Claims against Sunwest attorneys and certain brokers in e amount of $290, as well as reimbursement of costs actually advanced on eir behalf in e amount of $11, The Law Firm incorporates herein and relies upon e case file in is and related cases in state and federal district and bankruptcy courts, e memorandum below, and e Page 1 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

2 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 2 of 9 Page ID#: Declaration of Paul R.J. Connolly filed herewi and e exhibits attached ereto. I. Factual Background. A. DWT Claims. The Law Firm began its representation of various Sunwest Investors during e summer of 2008, shortly after Sunwest ceased making its rental and interest payments to tenant in common and oer investors. The Law Firm s initial clients consisted of a group of investors in e Emerald Square assisted living facility in Oklahoma and e Park Place assisted living facility in Sou Carolina. Eventually, e Law Firm began receiving multiple inquiries from multitudes of oer Sunwest investors in oer Sunwest-related projects. i. Nature of Client Relationships Wi Law Firm. The Law Firm s legal strategy from e outset went down two parallel but independent tracks one track compiling information for investors on possible work-outs wi Sunwest, lenders and oers, and e oer track investigating possible claims for damages against Sunwest, its various entities, and ird parties such as law firms, brokers and oer professionals. For e most part, e Law Firm s Sunwest investor clients were given e option of taking one or bo tracks, each wi its own fee agreement. ii. Compensation for Work-Outs and Direct Representation in Receivership/Bankruptcy Cases are Not Sought in This Petition. The Law Firm is not seeking compensation for time and costs associated wi possible work-outs or in eir representation of various client interests in e SEC or Stayton Bankruptcy cases. iii. DWT Litigation Strategy. The Law Firm s first comprehensive lawsuit at named Davis Wright Tremaine and Page 2 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

3 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 3 of 9 Page ID#: Tim Dozois (togeer DWT ) was filed on October 30, 2008 in Davis Carnegie Village, LLC et al. v. First American Title Company, et al., Marion County Case No. 08C From e outset of is case, e Law Firm s strategy was to deal wi e liability of DWT primarily, focusing most discovery efforts at at defendant and dealing wi oer defendants only as necessary. iv. Notice of Claims to DWT s Insurers. In e course of discovery in e Carnegie Village litigation, e Law Firm learned at DWT had excess coverage in e amount of $40 million, and at e policy was set to lapse on December 31, 2008, which was only a matter of weeks away. Therefore, as part of our representation for all of our Sunwest investor clients, we began e process of getting consent to present claims to DWT and its insurance carriers before e expiration of e policy. The Law Firm recognized at ere was a distinct possibility at e policy could be cancelled at its expiration and any claims at were tendered after December 31, 2008 would be denied. As is was explained to our en-current clients, e Law Firm received numerous requests from oer Sunwest investors to be included in e Law Firm s claim letter. We agreed to present such claims on behalf of ese new clients on a limited basis e Law Firm would present e claims for a flat fee, wi subsequent representation to be negotiated at a later date. As a result of is effort, which involved significant administrative burden and expense during e 2008 holiday season, e Law Firm presented claims from approximately 370 Sunwest investors to e attorneys representing DWT on December 30 and 21, 2010, which was supplemented on January 2, Page 3 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

4 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 4 of 9 Page ID#: v. Work Performed in DWT Litigation and Subsequent Mediation Protocol. During e first six mons of 2009, e Law Firm continued to exchange discovery wi e attorneys representing DWT, including gaering and compiling discovery from e Law Firm s various investor clients as requested by DWT. Also during is time, e Law Firm began filing additional lawsuits against DWT, K&L Gates, certain brokers and oers. These efforts continued until approximately June 2009, when, under e auspices of e SEC Receivership case, an agreement was reached between e Receiver and attorneys for investor plaintiffs to allocate responsibilities between and among e various claimants attorneys, in an effort to avoid duplication of efforts and furer erode DWT s wasting policy. Also at at time, a mediation protocol had been set up at had e effect of staying any direct activity against DWT in e litigation. All of ese developments had to be communicated to e Law Firm s numerous clients, which was done primarily by in an attempt to preserve resources and provide information in a relatively cost-effective manner. However, considerable time was expended answering individual questions from clients via telephone and . vi. Law Firm s Participation in Mediation and Settlement Duties. In or around October 2009, after considerable negotiations, e attorneys for DWT and e plaintiff investor counsel reached an agreement in principle on a global settlement of all Sunwest-related claims. At at time, e Law Firm expended significant time and effort explaining e terms of e settlement to clients, conferring wi opposing and aligned counsel regarding e proper form of settlement agreement, and ensuring at appropriate notifications were submitted to e courts in which e litigation was pending, including filing Page 4 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

5 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 5 of 9 Page ID#: motions to stay and in some cases notices of dismissal wiout prejudice. The Law Firm also expended significant energies in getting its clients signatures to e settlement agreement and delivering em to e attorneys representing DWT in a timely manner. B. K & L Gates Claims. The Law Firm also presented claims for approximately 50 investors to K & L Gates, also in December 2008, and filed two lawsuits against at law firm in early 2009: Momyer s Overlook, LLC, et al. v. K & L Gates LLP, et al., Marion County Case No. 09C16149 and Bolster s 9 & Rose, LLC, et al. v. K & L Gates LLP, et al., Marion County Case No. 09C This litigation required a significant amount of motions practice, as well as extensive document discovery from e Law Firm s clients. However, e litigation was stayed in early 2010 as e global mediation process under is Court began to take shape. During e K & L Gates mediation, e attorneys representing K & L Gates demanded interviews wi certain investors in order to test e factual underpinnings for e claims against at law firm. Two of e Law Firm s clients were chosen for interviews, and e Law Firm spent significant time gaering discovery, preparing e clients for e interviews, and attending e interviews. C. Broker-Dealer Claims. The Law Firm also represents 16 clients in litigation against several broker-dealers. In e summer and fall of 2010, e Law Firm filed lawsuits against ese broker-dealers and eir affiliated entities, which were almost immediately mediated and for which an agreement in principal was reached in August The Law Firm participated in two rounds of mediations and in several conference calls ereafter. Page 5 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

6 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 6 of 9 Page ID#: II. Compensation for Reasonable and Necessary Attorney Fees and Costs is Equitable Under e Circumstances. As shown above, e Law Firm provided an appreciable benefit to e Receivership Estate, and e legal services performed enhanced e value of e settlements at were negotiated wi e law firms and brokers - value at far exceeds e reasonable hourly cost of e legal services. Additionally, e Law Firm endeavored to reduce e ultimate cost to its clients, and ultimately e Receivership Estate, by cooperating wi oer counsel, including e Receiver s counsel, e Court-appointed mediation counsel, and e law firms of Esler, Stephens & Buckley ( ESB ) and Grenley, Rotenberg, Evans, Bragg & Bodie ( Grenley ). This is borne out by e relatively low lodestar amount of $290, in relation to attorney fee requests from oer firms at exceed e Law Firm s request by multitudes. A. The Law Firm Should Be Reimbursed at Similar Rates to That of Oer Third Party Claims Counsel. As noted in e Declaration of Paul R.J. Connolly, e Law Firm s customary billing rates are lower an e rates submitted by ESB and Grenley for attorneys, paralegal and staff of similar experience levels. The primary reason for e difference in customary billing rates is due to e location of e firms e Law Firm is located in Salem, Oregon, while e ESB and Grenley firms are located in Portland, Oregon. It would be inequitable to compensate similarly experienced professionals at vastly different rates based solely on e location of eir home offices. Indeed, e bulk of e legal work, including e multitude of mediations, court appearances, and meetings, occurred eier in Portland or in Eugene. Throughout ese cases, and in oer cases Page 6 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

7 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 7 of 9 Page ID#: before is court, bo related and not related to e instant Receivership case, e Law Firm has proven at it operates on-par wi its Portland counterparts. For is reason, e Law Firm has requested compensation at billing rates at are equivalent to ose sought for professionals wi similar experience levels by e oer law firms. B. Much of e Law Firm s Requested Attorney Fees and Costs Will Be Refunded to e Law Firm s Clients. While e majority of e Law Firm s clients agreed to a contingent fee arrangement, some clients opted to pay e Law Firm on a time and materials basis. For ose clients who did pay portions of e Law Firm s incurred fees and costs, an award of attorney fees and costs to e Law Firm will result in a refund to many of e Law Firm s clients. C. Attorney Fees and Costs Incurred Pursuing Claims Against Defendants Oer Than DWT, K & L Gates and Brokers Are Not Sought. In many of e cases brought by e Law Firm, e settling defendants are not e only named defendants in e litigation. The attorney fee detail in e attached Exhibit 1 does not include fees incurred in connection wi claims against any defendant oer an e settling law firms and brokers, and where fees benefitted bo claims against settling defendants and non-settling defendants, e fees were reduced in proportion to e number of non-settling defendants in e case. Thus, e fees listed in Exhibit 1 reflect, to e extent humanly possible, only ose fees at have a nexus to e claims against e settling parties DWT, K & L Gates and e settling brokers. Page 7 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

8 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 8 of 9 Page ID#: D. To e Extent e Court Awards a Multiplier to Any Oer Counsel, Such Multiplier Should be Applied to e Law Firm as Well. The Law Firm recognizes at wheer and to what extent e Court will award a multiplier to any attorney for investors in is case rests wiin e sound discretion of e Court, sitting in equity. To e extent at any multiplier is awarded to any law firm, e Law Firm asks at e same multiplier by awarded to e Law Firm. In support of e Law Firm s claim for a multiplier, it bears noting at e Law Firm is a small business operating wi only ree full time attorneys and four to five full time staff. The Law Firm s agreement to represent e Sunwest investors took considerable time and resources at e Law Firm could have devoted to oer more profitable sources of revenue. In addition, e ever-expanding complexities of e case required e Law Firm to hire additional staff and make oer capital expenditures at oerwise would not have been necessary. The Law Firm undertook significant risk on ese additional investments, not only on e direct time and effort devoted to e cases. These factors counsel towards an award of a multiplier on e Law Firm s lodestar amount. III. Conclusion. Based on all e facts and circumstances in is case, e Law Firm respectfully requests an award of reasonable and necessary attorney fees incurred in its work on behalf of Sunwest Investors over e last two and a half years in e sum of $290,598.50, plus reimbursement of e Law Firm s and its clients out-of-pocket expenses, costs and disbursements in e sum of $11, While e Law Firm was but one member of e team which wi e mediators gained over $55 million in ird-party settlements for e benefit of Sunwest Investors, e Law Firm respectfully submits at it contributed Page 8 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL

9 Case 6:09-cv HO Document 1810 Filed 01/07/11 Page 9 of 9 Page ID#: significantly to e group effort and helped achieve a result far greater an its incurred fees and expenses. DATED is 7 day of January, By /s/ Kevin J. Jacoby Paul R.J. Connolly, OSB # Kevin J. Jacoby, OSB # Telephone: (503) Of Attorneys for Law Office of Paul R.J. Connolly. Page 9 - PETITION AND STATEMENT FOR ATTORNEY FEES AND COST BILL