Monday, July 23, 2007

Disputed Fee Claims

The United States District Court for the District of Columbia denied cross-motions for summary judgment in a matter where several law firms had brought an action against the FDIC regarding the agency's decisions on fee payments. The law firms had represented shareholders of Benjamin Franklin Savings & Loan in a shareholder derivative suit and class action after FDIC had been appointed as the receiver for the bank. The IRS asserted a claim for an "amount [that] far exceeded the surplus of the receivership." The firms represented the shareholders in the tax case. The matter was settled for $50 million and FDIC agreed to pay attorney's fees.

Unsatisfied with the fee payments, the firms filed suit. The court denied summary judgment to the firms, holding that the fee payments were not based on a prevailing party status: "Rather, the FDIC's payments here are part of an overall agreement reached amongst the parties and the United States to settle the tax case." FDIC was not entitled to summary judment because it  "has not provided any evidence to justify its lodestar calculations for payments to plaintiffs." Without an evidentiary basis to evaluate the fee payments, "the Court cannot conduct a de novo review of the FDIC's payment decisions." (Mike Frisch)

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