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Lani v. Schiller Kessler & Gomez, PLC

United States District Court, W.D. Kentucky, Louisville

December 16, 2016

ALAN LANI, on behalf of SCHILLER KESSLER & GOMEZ, PLLC, A Kentucky Professional Limited Liability Company PLAINTIFF
v.
SCHILLER KESSLER & GOMEZ, PLC, A Florida Professional Limited Company, MARC SCHILLER; ANDREW KESSLER; MARCELO GOMEZ; SCHILLER KESSLER & GOMEZ, PLLC DEFENDANTS

          MEMORANDUM OPINION

          Charles R. Simpson III, Senior Judge.

         I. Introduction

         This matter is before the Court on the motion of Defendants Schiller Kessler & Gomez, PLC, Mark Schiller, Andrew Kessler, Marcelo Gomez, and Schiller Kessler & Gomez, PLLC (collectively, “Defendants”) for an award of attorney fees and costs, ECF No. 19. Plaintiff Alan Lani responded, ECF No. 21, and Defendants replied, ECF No. 22. Lani then moved for leave to file a sur-reply, ECF No. 23, and tendered a sur-reply, ECF No. 23-1. Defendants responded to Lani's motion for leave to file a sur-reply, ECF No. 26, and Lani replied, ECF No. 28.

         Because these motions involve the same facts and issues, the Court will address them in a single memorandum opinion and order. For the reasons discussed below, the Court will grant Defendants' motion for attorney fees and costs. The Court will deny Lani's motion for leave to file a sur-reply.

         II. Background

         On December 1, 2015, Lani filed a derivative action on behalf of Schiller Kessler & Gomez, PLLC's membership interests in the Jefferson County, Kentucky Circuit Court. Compl. 1, ECF No. 1-1. Lani alleged that the individual defendants-Schiller, Kessler, and Gomez- began improperly sending fees earned by Schiller Kessler & Gomez, PLLC in Kentucky to their Florida business, Schiller Kessler, & Gomez, PLC, which caused the Kentucky company to suffer financial losses. Id. ¶ 18-20.

         A month after Lani filed the derivative action, Schiller Kessler & Gomez, PLC, Schiller, Kessler, and Gomez removed the suit to this Court under diversity jurisdiction. Not. Removal, ECF No. 1. Lani moved to remand the case to the Jefferson County Circuit Court, Mot. Remand, ECF No. 6, or in the alternative to add a party defendant, Mot. Add Party, ECF No. 7. The Court denied the motion to remand and denied as moot the alternative motion to add a party defendant. Order 2, ECF No. 18.

         Schiller Kessler & Gomez, PLLC then moved to intervene and realign the parties so that it would be named as a nominal defendant. Mot. Intervene, ECF No. 3. The Court granted the motion to intervene and realign the parties. Order 1, ECF No. 18.

         Defendants then moved to dismiss the suit with prejudice for lack of subject matter jurisdiction, for failure to state a claim, and for lack of personal jurisdiction. Mot. Dismiss, ECF No. 2. The Court found that Lani lacked standing to bring a derivative action on behalf of Schiller Kessler & Gomez, PLLC. Mem. Op. 14, ECF No. 17. The Court thus granted the Defendants' motion to dismiss for lack of subject matter jurisdiction and dismissed the complaint without prejudice.[1] Order 1, ECF No. 18. The Court declined to award Defendants any attorney fees or costs at that time. Mem. Op. 14, ECF No. 17.

         III. Discussion

         Defendants now move for an award of attorney fees and costs under Kentucky Revised Statute § 275.337(8)(a) against Lani. Mot. Att'y Fees, ECF No. 19. Lani has also moved for leave to file a sur-reply to Defendant's reply to their motion for an award of fees and costs. Mot. Leave Sur-Reply, ECF No. 23.

         A. Motion for Award of Attorney Fees and Costs

         i. Whether Fees and Costs Should be Granted

         Defendants argue that attorney fees and costs should be awarded under Kentucky Revised Statute § 275.337(8)(a) because (1) Lani lacked standing to bring the lawsuit, (2) Lani failed to fulfill the statutory requirements of a derivative action, and (3) Lani improperly attempted to use the derivative action to enrich himself. Mem. Supp. Mot. Att'y Fees 6-10, ECF No. 19-1. In response, Lani asserts that the derivative action was brought with reasonable cause because “the members of [Schiller Kessler, & Gomez, PLC] were effectively stealing from [Schiller Kessler & Gomez, PLLC] with their reduction of fees.” Resp. Opp. Mot. Att'y Fees 3, ECF No. 21. He asserts that the action was commenced for a proper purpose because he desired to “compel [Schiller Kessler, & Gomez, PLC] to refund [Schiller Kessler & Gomez, PLLC] what had been taken, so that the fees generated for work performed for clients of [Schiller Kessler & Gomez, ...


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