UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
FLOWIND CORPORATION, No. 97-12265
v. A.P. No. 98-1091
FLOWIND CORPORATION, et al.,
Memorandum re Attorneys' Fees
Prior to bankruptcy, debtor FloWind had sold all of its wind rights in certain property owned
by the federal government to plaintiff Windkraft. Even though Windkraft paid the purchase price in
full, when FloWind filed its Chapter 11 petition it scheduled the rights as its assets. Windkraft had
disappeared after building a few test windmills, and FloWind thought it that because it was still the
owner according to government records it could re-assert ownership even though it had been paid in
FloWind's scheme was foiled when Windkraft appeared in time to object to the plan.
Windkraft also filed an adversary proceeding seeking to establish that the wind rights belonged to it,
and not FloWind.
FloWind's plan called for the sale of the disputed wind rights to defendant WindCo . They
were both in a hurry to consummate the sale. When the court announced that it would not confirm the
plan until the ownership issue was resolved, the parties entered into an interim compromise. Under the
terms of the compromise, Windkraft would withdraw its objection and allow the plan to be confirmed.
In return, the plan was amended to provide that WindCo could elect to go forward with the purchase,
stepping into FloWind's shoes and being subject to all of Windkraft's claims to the property to the
same extent as FloWind.
After trial, the court ruled in favor of Windkraft. It found that FloWind's assertion of
ownership of the wind rights after Windkraft had paid in full for those rights was nothing less than
attempted larceny. Windkraft's motion for attorneys' fees is now before the court.
At the trial of this matter, WindCo's principal defense was that the contract did not really mean
what it said, and that something less than the full rights described in the contract were actually
purchased by Windkraft. The contract between FloWind and Windkraft was therefore central to the
adversary proceeding. The contract provided:
If any Party brings any action or proceeding for the enforcement,
protection or establishment of any right or remedy under this Agreement
or for the interpretation of this Agreement, the prevailing Party shall be
entitled to recover its reasonable attorneys' fees and costs in connection
with such action or proceeding, whether or not taxable.
Whether Windkraft is entitled to its attorneys' fees depends on the exact nature of the
compromise. If WindCo only was to take the property subject to Windkraft's claims, then it is not
liable for attorneys' fees because it was not a party to the contract between FloWind and Windkraft.
However, if WindCo became FloWind's successor under the contract, then it is treated the same as
FloWind and has the same liabilities under the contract. Since the compromise was incorporated into
the plan, the court must construe the plan. Its relevant language provides:
If a final judgment in the Windkraft Adversary Proceeding has not been
rendered prior to the Effective Date, and WindCo elects to implement the
Plan with respect to the assets that are the subject of the Windkraft
Adversary Proceeding, then as of the Effective Date, WindCo shall
succeed to the Debtor's position in the Windkraft Adversary Proceeding
and WindCo and Windkraft shall be bound by and comply with the
terms of any final judgment rendered therein and such final judgment
shall be enforceable against Windkraft and WindCo.
The affirmative language "succeed to the Debtor's position" makes it clear that if WindCo
elected to proceed it would be doing more than just taking the property subject to Windkraft's claims.
In return for Windkraft's consent to the plan, it was agreed that WindCo, if it elected to proceed,
would be bound by any
judgment in the adversary proceeding. There is no exclusion of attorneys'
WindCo points out correctly that if FloWind had continued to defend the adversary
proceeding as debtor in possession, then Windkraft's claim for attorneys' fees, while allowable, would
not be entitled to priority status. However, there is no relevance to this point of law. If FloWind is
for Windkraft's attorneys' fees, then under the plan WindCo is equally liable
. The fact that
FloWind would not have paid
the award until after its priority creditors were paid does not give
WindCo some sort of defense. Pursuant to the plan, the judgment in this case is enforceable against
WindCo. If the judgment includes attorneys' fees, the award is enforceable against WindCo regardless
of priority issues in the FloWind bankruptcy.
The amount of the award is the easiest part of this dispute to resolve. The amount is entirely
reasonable, especially considering the litigation tactics employed by WindCo. Most notably, during
the case WindCo filed an enormous (and utterly meritless) motion for summary judgment along with
briefs of almost 75 pages. WindCo circumvented this district's 25 page limit on briefs by breaking the
motion up into three "partial" motions. The court summarily denied the motion on account of these
procedural machinations, but not before Windkraft had been subjected to considerable expense. This
sort of conduct has been, and continues to be, the typical approach of WindCo to this litigation: there
is no issue so simple that it cannot be made complex, convoluted, and expensive through voluminous
motions, briefs, and argument. Having made the litigation far more expensive than it ever needed to
be, WindCo cannot complain when confronted with a large claim for fees. WindCo's liability for
these fees is nothing more complicated than simple justice.
For the foregoing reasons, Windkraft's motion for attorneys' fees will be granted, in full.
Counsel for Windkraft shall submit an appropriate form of order.
Dated: August 5, 1999 ____________________________
United States Bankruptcy