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VP Louisville, LLC v. NBH Bank, N.A.

Court of Appeals of Kentucky

June 28, 2019

VP LOUISVILLE, LLC APPELLANT
v.
NBH BANK, N.A. AND SMILING HOSPITALITY, INC. APPELLEES

          APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE BRIAN C. EDWARDS, JUDGE ACTION NO. 12-CI-402375

          BRIEFS FOR APPELLANT: Charles G. Middleton III Thomas W. Frentz Louisville, Kentucky

          BRIEF FOR APPELLEE: Robert W. “Tad” Adams III Andrew M. Noland Lee Wilson Daley Louisville, Kentucky

          BEFORE: TAYLOR, K. THOMPSON AND L. THOMPSON, JUDGES.

          OPINION

          THOMPSON, K., JUDGE

         This appeal concerns attorney fees and expenses to legal counsel hired by a court-appointed receiver in a foreclosure action. VP Louisville, LLC, argues that while the Jefferson Circuit Court properly decided the issue of attorney fees and expenses in an April 2016 order, its subsequent orders were inconsistent with that order in that it did not specify the amount of attorney fees owed.

         In June 2012, NBH Bank, N.A. filed a foreclosure action against VP Louisville after VP Louisville defaulted on a $4.2 million dollar loan secured by a hotel known as Value Place. Upon NBH Bank's motion, the trial court appointed Smiling Hospitality, Inc. as receiver for the hotel on July 12, 2012. The receiver order specifically stated:

That the Receiver and those agents and any property managers acting under its control shall have no personal liability in connection with their actions undertaken in furtherance of the Receiver's duties except for damages arising from their gross negligence, willful misconduct, and/or willful failure to comply with the orders of this Court.

         The order also permitted Smiling Hospitality to retain attorneys with all reasonable expenses incurred to be expenses of the receivership. Smiling Hospitality and NBH Bank entered into an indemnity letter stating that Smiling Hospitality would have no liability as a result of acting as receiver.

         Smiling Hospitality hired attorney Lewis J. Rotman, and the firm of Hinshaw & Culbertson, LLC (H&C), a Minnesota law firm, as its counsel. The Louisville, Kentucky, firm of Adams Law Group was hired as local counsel. The attorneys at H&C billed an hourly rate of $750 for Mr. Rotman, $315 for Shushanie Liesinger, and $220 for Jessica Nelson. The attorneys at the Adams Law Group billed at an hourly rate of $285-$300 for Tad Adams and $225 for Carolyn Bauer.

         Smiling Hospitality filed its first receiver report on July 20, 2012, wherein it described deplorable conditions at the hotel, including a methamphetamine lab. Thereafter, Smiling Hospitality filed monthly reports detailing its actions during that month. During the five months the receivership was in place, VP Louisville filed more than thirty motions, including objections to every receiver report, alleging Smiling Hospitality had engaged in misconduct as receiver. The trial court at no time found Smiling Hospitality engaged in any misconduct.

         On October 29, 2012, the parties executed a settlement agreement which provided that operation of the hotel would be returned to VP Louisville. Smiling Hospitality remained as receiver until December 14, 2012, and operation of the hotel was then returned to VP Louisville.

         On January 11, 2013, Smiling Hospitality filed a final report and a supplemental report on August 13, 2013. VP Louisville objected to the attorney fees and expenses billed by H&C to Smiling Hospitality in the amount of $206, 203.52. There was no objection to any of the Adams Law Group's attorney fees. The trial court held an evidentiary hearing on the attorney fees and expenses billed by H&C, which the trial court stated was the "sole remaining issue[.]"

         VP Louisville presented expert testimony from attorney Michael Gosnell who testified he had represented numerous receivers appointed for properties that he had foreclosed on for lenders. He testified the standard hourly rate for attorneys representing receiverships in Jefferson County ranges from $200-$250 per hour. His opinion was that any fees exceeding $250 per hour do not ...


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