Securities Exchange, et al v. Pension Fund, et al

Filing 798

REPORT AND RECOMMENDATION (780) Recommending Granting Application for Fees and Costs. Objections to R&R due by 6/15/2009. Signed by Magistrate Judge Andrea M. Simonton on 5/28/2009. (lc3)

UNITED STATES DISTRICT COURT S O U T H E R N DISTRICT OF FLORIDA C A S E NO. 05-20863-CIV-MOORE S E C U R IT IE S AND EXCHANGE C O M M IS S I O N , P l a i n t i ff , v. P E N S IO N FUND OF AMERICA, L.C., P F A ASSURANCE GROUP, LTD., P F A INTERNATIONAL, LTD., CLAREN T P A , LLC, LUIS M. CORNIDE, and ROBERT DE LA RIVA, D e fe n d a n t s . /

R E P O R T AND RECOMMENDATION T H IS CAUSE is before the Court by Order of reference from United States District J u d g e K. Michael Moore (DE #781). Pursuant to such reference, the Court has received th e Application for Allow a n c e And Payment of Compensation and Reimbursement of E x p e n s e s to the Receiver and his Retained Professionals For Period of September 1, 2 0 0 8 through February 28, 2009 (DE #780). Counsel for the Receiver has appended a C e rt ific a tio n to this Application advising that the Receiver is posting on the receivership w e b s ite , simultaneously w ith the filing of the Application, a notice advising the he is filin g this Application and that a copy may be obtained upon request. (DE #780 at 20). The Court has review e d the docket in this cause and notes that no objections to the A p p lic a tio n for Allow a n c e And Payment of Compensation and Reimbursement of E x p e n s e s to the Receiver and his Retained Professionals For Period of September 1, 2 0 0 8 through February 28, 2009 have been filed and the Court is unaw a re of any o b je c tio n s . As set forth below , the undersigned Magistrate Judge recommends that the A p p lic a tio n be granted and the requested amounts be allow e d .

F A C T U A L BACKGROUND T h is cause w a s instituted by the filing of a complaint by the Securities Exchange C o m m is s io n seeking the entry of an injunction against the defendants from engaging in t h e activities that w e r e alleged in the complaint, to take possession of all property, a s s e ts and estates of the Defendants and for the appointment of a receiver to prevent the d is s ip a tio n of assets and to perform all of the duties and obligations set forth in the O rd e rs Appointing the Receiver. By Order dated March 28, 2005 (DE #16), the Court entered its Order Appointing R e c e iv e r, and on April 15, 2005, (DE #57), its Amended Order Appointing Receiver. Pursuant to such Orders, the Court appointed Thomas G. Schultz to serve as Receiver, s p e c ific a lly delineating his pow e rs and authority. The Receiver thereafter engaged the law firm of Tew Cardenas as counsel for the R e c e iv e r . The Receiver also retained the services of the accounting firm Berkow itz , Dick P o lla c k & Brant ("Berkow itz Dick") as tax accountants. The Application seeks payment o f compensation and reimbursement of expenses for the Receiver and his professionals ( T e w Cardenas and Berkow it z Dick) for the period of September 1, 2008 through February 2 8 , 2009. The Court has carefully examined the Application, the summaries of the times e x p e n d e d by the Receiver and his professionals, as w e ll as their hourly rates, and has c o n s id e r e d the various claims for costs and expenses. The Court notes that the R e c e iv e r, his attorneys, and accountants have capped their hourly rates at $350.00 for th e Receiver and his senior attorney, at $250.00 for the accountants, and at $125.00 for p a r a le g a ls at Tew Cardenas. Such capped rates are significantly low e r than their usual h o u rly rates. See, (DE #780 at 14-15).

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D IS C U S S IO N T h e Court recognizes the complexities of this receivership and efforts required to m a rs h a l the assets and preserve and recover same. The Court, in considering the re a s o n a b le n e s s of the fees and costs sought, has considered the factors enunciated in J o h n s o n v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) as w e ll as the n a tu r e and extent of the services rendered and their value. Although Johnson involved a n aw a rd of fees in a civil rights action, consideration of its factors is helpful to the C o u r t. The Johnson factors are: (1) the time and labor required; (2) the novelty and d iffic u lty of the legal questions; (3) the skill required to perform the legal services p r o p e r ly ; (4) the preclusion of other employment by the attorney due to acceptance of th e case; (5) the customary fee for similar w o rk in the community; (6) w h e th e r the fee is fix e d or contingent; (7) time limitations imposed by the client or the circumstances; (8) t h e amount involved and the results obtained; (9) the experience, reputation, and ability o f the attorney; (10) the under-desirability of the case; (11) the nature and length of the p r o f e s s io n a l relationship w it h the client; and (12) aw a r d s in similar cases. The Court fin d s that upon applying the Johnson factors to the fees and costs requested by the R e c e iv e r and his professionals that the requested fees and costs are reasonable. In particular, based upon the Court's experience in other similar cases, the Court fin d s that the amount of fees sought are consistent w ith or below those charged in s im ila r cases in this community. The Court notes that the Receiver and his professionals h a v e handled this case in a highly professional manner w ith a view tow a r d s an e x p e d itio u s resolution. Such excellent efforts are evident through the distribution in O c to b e r 2008 of approximately $31.6 million in recovered monies to investors and c re d ito rs holding allow a b le claims as reported by the Receiver in the Application. The Receiver reports that this recovery provides all PFA investors w ith allow a b le 3

c la im s to recoup 60% of their actual losses and notes that said amount may increase d e p e n d in g on the final allow e d amount of claims. In addition, the Receiver has recently file d a motion (DE # 778) seeking to make a second interim distribution in the amount of $ 3 million dollars based on the release of estate cash reserves, and from recoveries d u rin g the period of the Application based upon settlements and the liquidation of r e m a in in g assets, including the net proceeds from the sale of the former residence of R o b e rt De la Riva, a former defendant. Further, the Receiver also reports that he w ill m a k e a third and final distribution w h e n all claims objections are finally determined. In addition, during the period for w h ic h fees and costs are sought the Receiver, h is counsel, and accountants performed significant w o r k and made substantial progress to w a rd s the resolution of this matter including, but not limited to, the follow in g : c o n d u c t in g discovery and thereafter preparing and filing motions for summary d i s p o s i t io n on Receiver's objections, many w h i c h w e r e granted by the Court, as to c e r ta in proof of claims, including a proof of claim filed by a claimant totaling a p p r o x im a te ly $8 million; filing a motion to dismiss a claimant's appeal of his disallow e d c la im s (DE ## 733, 756); filing a motion to enjoin one claimant from proceeding w ith civil litig a tio n in Costa Rica (DE # 758, 761, 772); overseeing the sale of a former residence of o n e of the defendants w h ic h realized approximately $1.1 million for distribution for c re d ito r s ; obtaining Court approval of settlements after attending final hearing on the a p p ro v a l of the settlements (DE # 750); performing tasks related to the w in d up of certain fo r e ig n proceedings; and completing various other tasks related to the administration of th e receivership including maintenance of the document depository and disseminating c o m m u n i c a t i o n s to over 3200 investors. All of such services, as w e l l as others set forth in the Application, resulted in moving this matter to resolution and recovering s u b s t a n t ia l assets, all to the benefit of investors. 4

T h e Court, after a thorough review of submissions of the Receiver, finds that the r e q u e s ts for fees and expenses for the six month period from September 1, 2008 through F e b r u a r y 28, 2009 for the Receiver, the Receiver's Counsel Tew Cardenas, and the a c c o u n t in g firm of Berkow itz & Dick are all reasonable and for services performed that w e re necessary in this cause. The Court further finds that applications for costs and e x p e n s e s w e r e appropriate, reasonable and necessary. C O N C L U S IO N AND RECOMMENDATION F o r the reasons set forth above, the undersigned respectfully RECOMMENDS that the Application for Allow a n c e And Payment of Compensation a n d Reimbursement of Expenses to the Receiver and his Retained Professionals For P e r io d of September 1, 2008 through February 28, 2009 (DE #780) be GRANTED as fo llo w s : 1 . That the Receiver Thomas G. Schultz be allow e d compensation in the amount of $ 6 2 ,2 6 5 .0 0 for 177.90 hours at an hourly reduced rate of $350.00 1; 2 . That the law firm of Tew Cardenas, LLP., the Receiver's counsel, be allow e d c o m p e n s a t io n as legal fees in the amount of $256,565.00, and reimbursement expenses o f $8,004.61, such amounts to be paid by Receiver; 3 . That Berkow itz Dick be aw a rd e d interim compensation in the amount of $ 1 1 ,6 4 1 .0 0 and expenses of $502.00, such amount to be paid by the Receiver. I t is further RECOMMENDED that such fees are interim and w i t h o u t prejudice to th e rights of the applicants herein to apply for additional compensation and r e im b u r s e m e n t for additional services and expenses not requested in the subject The Application listed 179.5 hours expended but included the total calculation a m o u n t reflecting 177.9 hours w h ic h is consistent w ith the Professional Fees bill s u b m itte d in support of the Application. See (DE 780 at 13, DE 780-2 at 14). Thus, the u n d e r s ig n e d has recommended an aw a rd calculated at 177.9 hours as reflected in the P ro fe s s io n a l Fees bill. 5
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A p p lic a tio n , should additional compensation and reimbursement be w a rr a n te d . The parties w ill have ten (10) days from the date of service of this Order w ith in w h ic h to file w r itte n objections, if any, for consideration by United States District Judge K. Michael Moore. Failure to file objections timely shall bar the parties from attacking on a p p e a l any factual findings contained herein. LoConte v. Dugger, 847 F.2d 745 (11th Cir. 1 9 8 8 ); RTC v. Hallmark Builders, Inc., 996 F.2d 1144, 1149 (11th Cir. 1993). D O N E AND ORDERED in Chambers in Miami, Florida, on this 28th day of May 2009.

ANDREA M. SIMONTON U N IT E D STATES MAGISTRATE JUDGE

C o p ie s furnished to: T h e Honorable K. Michael Moore, United States District Judge A ll counsel of record

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