Wiener Weiss & Madison A Professional Corp et al v. Fox

MOTION for Partial Summary Judgment on the Applicability of Louisiana Rule of Professional Conduct 1.5

W.D. La.February 10, 2017

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) CIVIL ACTION NO. 16:850 VERSUS JUDGE HICKS LESLIE B. FOX MAGISTRATE JUDGE HAYES MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE APPLICABILITY OF LOUISIANA RULE OF PROFESSIONAL CONDUCT 1.5(d)(1) NOW INTO COURT, through undersigned counsel, come plaintiffs WIENER, WEISS & MADISON, A PROFESSIONAL LAW CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION), which, with respect, represent: 1. This is a suit for breach of a contingency fee contract between Wiener, Weiss & Madison, A Professional Law Corporation, and Kantrow, Spaht, Weaver & Blitzer (A Professional Law Corporation)(collectively, the “Firms”) and their former client, Leslie B. Fox (“Fox”). 2. The Firms represented Fox for almost seven years as the non-debtor spouse in a complex bankruptcy proceeding. Case 5:16-cv-00850-SMH-KLH Document 43 Filed 02/10/17 Page 1 of 4 PageID #: 833 - 2 - 3. When Fox could not afford to pay an attorney, the Firms agreed to represent her on a contingency fee basis, ultimately obtaining an extraordinary, if not unprecedented, result for her. 4. Despite this, Fox has refused to honor her contingency fee agreement with the Firms. 5. Unable to amicably resolve their dispute, the Firms brought suit against Fox for breach of contract, and Fox counterclaimed, contending, inter alia, that the contingency fee agreement was unenforceable because it violated Louisiana Rule of Professional Conduct 1.5(d)(1). 6. Pursuant to Federal Rule of Civil Procedure 56, the Firms move for partial summary judgment on the applicability of Rule 1.5(d)(1). 7. As demonstrated in the supporting memorandum submitted herewith, Rule 1.5(d)’s prohibition against contingency fee contracts in “domestic relations matters” does not apply because, as a threshold matter, the Firms did not represent Fox in a domestic relations matter within the meaning of Rule 1.5(d)(1). 8. In addition, the Firms’ contingency fee agreement was not conditioned upon either (i) Fox’s securing a divorce or (ii) Fox’s obtaining a property settlement in lieu of alimony Case 5:16-cv-00850-SMH-KLH Document 43 Filed 02/10/17 Page 2 of 4 PageID #: 834 - 3 - or support. WHEREFORE, movants, WIENER, WEISS & MADISON, A PROFESSIONAL LAW CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION), pray that, after due proceedings are had, the court grant the Firms’ motion for partial summary judgment and hold that Rule 1.5(d)(1) does not apply to the Firms’ contingency fee agreement with Fox. COOK, YANCEY, KING & GALLOWAY A Professional Law Corporation By: s/ Herschel R. Richard, Jr. Herschel E. Richard, Jr. #11229 John T. Kalmbach #24484 David J. Hemken #35168 333 Texas Street, Suite 1700 P. O. Box 22260 Shreveport, LA 71120-2260 Telephone: (318) 221-6277 Telecopier: (318) 227-7850 herschel.richard@cookyancey.com john.kalmbach@cookyancey.com david.hemken@cookyancey.com ATTORNEYS FOR WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) Case 5:16-cv-00850-SMH-KLH Document 43 Filed 02/10/17 Page 3 of 4 PageID #: 835 - 4 - CERTIFICATE I HEREBY CERTIFY that a copy of the above and foregoing was filed with the United States District Court for the Western District of Louisiana by electronic case filing/case management and that a copy of the same was served on opposing counsel by either electronic notification or by U.S. mail, postage pre-paid. Shreveport, Louisiana, this 10th day of February, 2017. s/Herschel E. Richard, Jr. OF COUNSEL Case 5:16-cv-00850-SMH-KLH Document 43 Filed 02/10/17 Page 4 of 4 PageID #: 836 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) CIVIL ACTION NO. 16:850 VERSUS JUDGE HICKS LESLIE B. FOX MAGISTRATE JUDGE HAYES O R D E R Based on the foregoing: IT IS ORDERED that the motion for partial summary judgment on the applicability of Louisiana Rule of Professional Conduct 1.5(d)(1) filed by plaintiffs Wiener, Weiss & Madison, A Professional Law Corporation, and Kantrow, Spaht, Weaver & Blitzer (A Professional Law Corporation)(collectively, the “Firms”) be and is hereby GRANTED. IT IS FURTHER ORDERED that Louisiana Rule of Professional Conduct 1.5(d)(1) does not apply to the contingency fee agreement between defendant Leslie B. Fox and the Firms. THUS DONE AND SIGNED in Shreveport, Louisiana, on this ______ day of ____________, 2017. ________________________________ DISTRICT JUDGE Case 5:16-cv-00850-SMH-KLH Document 43-1 Filed 02/10/17 Page 1 of 1 PageID #: 837 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) CIVIL ACTION NO. 16:850 VERSUS JUDGE HICKS LESLIE B. FOX MAGISTRATE JUDGE HAYES MEMORANDUM IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE APPLICABILITY OF LOUISIANA RULE OF PROFESSIONAL CONDUCT 1.5(d)(1) COOK, YANCEY, KING & GALLOWAY A Professional Law Corporation Herschel E. Richard, Jr. #11229 John T. Kalmbach #24484 David J. Hemken #35168 333 Texas Street, Suite 1700 P. O. Box 22260 Shreveport, LA 71120-2260 ATTORNEYS FOR WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 1 of 25 PageID #: 838 - i - TABLE OF CONTENTS I. INTRODUCTION .................................................................................................. 1 II. BACKGROUND .................................................................................................... 1 III. LAW & ANALYSIS ................................................................................................ 2 A. The Firms Are Entitled to Partial Summary Judgment ............................... 2 B. Louisiana Rule of Professional Conduct 1.5(d)(1) Is Inapplicable .............. 3 (1) The Firms Did Not Represent Fox in a "Domestic Relations Matter" ............................................................................. 4 (2) Fox's Contingency Fee Agreement with the Firms Was Not Conditioned upon Fox's Securing a Divorce ........................... 15 (3) Fox's Contingency Fee Agreement with the Firms Was Not Conditioned upon Fox's Obtaining a Property Settlement in Lieu of Alimony or Support ....................................................... 18 C. Fox Needed and Benefitted from Her Contingency Fee Agreement with the Firms; There Is No Reason to Find Rule 1.5(d)(1) Applicable. .......... 18 IV. CONCLUSION .................................................................................................... 20 Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 2 of 25 PageID #: 839 - ii - TABLE OF AUTHORITIES Cases Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992) ....................................................... 5 In re Burrus, 135 U.S. 586, 593-94 (1890) ...................................................................... 5 In re Caddo-Bossier Gaming Company, LLC, No. 09-BR-11673 (W.D. La. filed June 9, 2009)........................................................................................................ 5 In re Harold L. Rosbottom, Jr., No. 09-BR-11674 (W.D. La. filed June 9, 2009), at Rec. Doc. 156, 1745 .................................................................................... passim In re Provenza, 316 B.R. 177, 216 (E.D. La. Bankr. 2003) .............................................. 6 In re Teel, 34 B.R. 762 (B.A.P. 9th Cir. 1983) ................................................................. 7 Reed v. Williams, 545 S.W.2d 33, 34 (Tex Civ. App.—San Antonio 1976) ............... 7, 12 Rosbottom v. Rosbottom, No. 10-BR-01003 (W.D. La. filed Jan. 7, 2010), at Rec. Doc. 1, 104, 106 ................................................................................................. 11 Succession of Cloud, 530 So. 2d 1146, 1150 (La. 1988) .............................................. 19 Sweet Lake Land & Oil Co. LLC v. Exxon Mobil Corp., No. 09-1100 (W.D. La. 11/3/11), 2011 WL 5326992, at *2 ........................................................................ 3 Statutes 11 U.S.C. § 362 ............................................................................................................... 6 11 U.S.C. § 363 ............................................................................................................. 14 11 U.S.C. § 541 ........................................................................................................... 6, 8 11 U.S.C. § 1107 ............................................................................................................. 9 28 U.S.C. § 1746 ............................................................................................................. 5 Other Authorities ABA Model Rule of Professional Conduct 1.5 ................................................................. 4 ABA/BNA Lawyers’ Manual on Professional Conduct at § 41:919 (2016) ..................... 15 American Bar Association’s Lawyers’ Manual on Professional Conduct ....................... 15 Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 3 of 25 PageID #: 840 - iii - Bankruptcy Desk Guide § 12:15 ...................................................................................... 7 Fibich and Floyd, Impact of Bankruptcy on Family Law, 29 S. Tex. L. Rev. 637, 646 (1988) .......................................................................................................... 13 Louisiana Rule of Professional Conduct 1.5 ........................................................... passim Louisiana Rule of Professional Conduct 1.8 ................................................................ 2, 4 Louisiana Rule of Professional Responsibility 1.5 ..................................................... 3, 14 Public Opinion 05-002, 53 La. B.J. 136 at 152 .............................................................. 15 United States Code, Chapter 11 ..................................................................................... 6 V.T.C.A., Family Code § 7.002 ...................................................................................... 12 Rules Federal Rule of Civil Procedure 10 ................................................................................. 2 Federal Rule of Civil Procedure 56 ............................................................................. 1, 3 Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 4 of 25 PageID #: 841 MAY IT PLEASE THE COURT: I. INTRODUCTION This is a suit for breach of a contingency fee contract between Wiener, Weiss & Madison, A Professional Law Corporation, and Kantrow, Spaht, Weaver & Blitzer (A Professional Law Corporation)(collectively, the “Firms”) and their former client, Leslie B. Fox (“Fox”). The Firms represented Fox for almost seven years as the non-debtor spouse in a complex bankruptcy proceeding. When Fox could not afford to pay an attorney, the Firms agreed to represent her on a contingency fee basis, ultimately obtaining an extraordinary, if not unprecedented, result for her. Despite this, Fox has refused to honor her contingency fee agreement with the Firms. Unable to amicably resolve their dispute, the Firms brought suit against Fox for breach of contract, and Fox counterclaimed, contending, inter alia, that the contingency fee agreement was unenforceable because it violated Louisiana Rule of Professional Conduct 1.5(d)(1). Pursuant to Federal Rule of Civil Procedure 56, the Firms move for partial summary judgment on the applicability of Rule 1.5(d)(1). As demonstrated below, Rule 1.5(d)’s prohibition against contingency fee contracts in “domestic relations matters” does not apply because, as a threshold matter, the Firms did not represent Fox in a domestic relations matter within the meaning of Rule 1.5(d)(1). In addition, the Firms’ contingency fee agreement was not conditioned upon either (i) Fox’s securing a divorce or (ii) Fox’s obtaining a property settlement in lieu of alimony or support. II. BACKGROUND Contemporaneously herewith, the Firms have filed a companion motion for partial Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 5 of 25 PageID #: 842 - 2 - summary judgment, concerning the applicability of Louisiana Rule of Professional Conduct 1.8(a) to their contingency fee contract with Fox.1 The memorandum in support of that motion includes a detailed background section pertinent to both motions.2 Pursuant to Federal Rule of Civil Procedure 10(c), the Firms hereby adopt by reference that background section as if were repeated herein in its entirety, with the exception of the last paragraph, for which the following should be substituted: Unable to amicably resolve their dispute, on June 16, 2016, the Firms brought suit against Fox for breach of the contingency fee agreement.3 Fox answered the Firms’ complaint and asserted a counterclaim against the Firms, contending, inter alia, that the Firms’ contingency fee agreement violated Rule 1.5(d)(1)’s prohibition against contingency fee contracts in domestic relations matters.4 As a result, Fox contends that the contingency fee agreement is unenforceable and sought damages, disgorgement, and attorney’s fees for breach of fiduciary duty. Because Rule 1.5(d)(1) does not, as a matter of law, apply, the Firms seek partial summary judgment on this claim. III. LAW & ANALYSIS A. The Firms Are Entitled to Partial Summary Judgment. Summary judgment is appropriate as to “each claim or defense—or the part of each claim or defense—on which summary judgment is sought. . . .when there is no 1See Rec. Doc. 41. 2See Rec. Doc. 41-4 at 1 to 14. 3See Rec. Doc. 1. 4See Rec. Doc. 30 at counterclaim ¶ 37. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 6 of 25 PageID #: 843 - 3 - genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. Proc. 56(c). See also Sweet Lake Land & Oil Co. LLC v. Exxon Mobil Corp., No. 09-1100 (W.D. La. 11/3/11), 2011 WL 5326992, at *2 (discussing the 2010 amendment to Rule 56 which now expressly provides for partial summary judgment). Fox contends that the Firms’ contingency fee agreement is invalid under Rule 1.5(d)(1). However, as demonstrated below, Rule 1.5(d)(1) does not apply. B. Louisiana Rule of Professional Conduct 1.5(d)(1) Is Inapplicable. As demonstrated in the Firms’ companion motion for partial summary judgment, the Firms’ contingency fee agreement with Fox is governed by Louisiana Rule of Professional Responsibility 1.5(c), which provides: A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by Paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client. A copy or duplicate original of the executed agreement shall be given to the client at the time of execution of the agreement. The contingency fee agreement shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; the litigation and other expenses that are to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. In her answer and counterclaim, however, Fox contends that her contingency fee agreement with the Firms violates Rule 1.5(d)(1), which precludes contingency fee Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 7 of 25 PageID #: 844 - 4 - agreements in “domestic relations matters” under certain circumstances.5 Specifically, Rule 1.5(d)(1) provides: A lawyer shall not enter into an arrangement for, charge, or collect: (1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof. (Emphasis added). Thus, for Rule 1.5(d)(1)’s prohibition to apply, there must—as a threshold issue—be a “domestic relations matter.” If there is a domestic relations matter, then a lawyer may not collect a fee which is contingent upon either (i) the securing of a divorce or (ii) obtaining a property settlement “in lieu” of alimony or support.6 As demonstrated below, none of these criteria are present in this case, and the Rule 1.5(d)(1) prohibition is clearly not applicable. (1) The Firms Did Not Represent Fox in a “Domestic Relations Matter.” As detailed in Firms’ companion motion for partial summary judgment on the applicability of Rule 1.8(a), Fox is the former wife of Harold L. Rosbottom, Jr. 5Id. 6Rule 5.1(d) is identical to ABA Model Rule of Professional Conduct 1.5 (2002). The comments to ABA Model Rule 1.5 explain: Paragraph (d) prohibits a lawyer from charging a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement to be obtained. This provision does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under support, alimony or other financial orders because such contracts do not implicate the same policy concerns. ABA Model Rule 1.5, cmt.[6]. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 8 of 25 PageID #: 845 - 5 - (“Rosbottom”).7 In 2009, Fox retained the Firms to represent her interests in two related bankruptcy proceedings, viz.: (a) a chapter 11 bankruptcy filed by Rosbottom, see In re Harold L. Rosbottom, Jr., No. 09-BR-11674 (W.D. La. filed June 9, 2009) (“BR Docket No. 09-11674”); and (b) a chapter 11 bankruptcy proceeding filed by Caddo- Bossier Gaming Company, LLC (an entity owned by Fox and Rosbottom), see In re Caddo-Bossier Gaming Company, LLC, No. 09-BR-11673 (W.D. La. filed June 9, 2009); (collectively, the “Bankruptcy Proceedings”).8 When Rosbottom commenced the Bankruptcy Proceedings, Fox and Rosbottom had been involved in an extremely contentious divorce proceeding that had been pending in Dallas County, Texas, for over five years.9 The Firms represented Fox as a non-debtor spouse in the Bankruptcy Proceedings.10 As a non-debtor spouse in bankruptcy with her own claims against Rosbottom for fraud and mismanagement, Fox was both a residual equity owner and general unsecured creditor of the Rosbottom bankruptcy estate.11 A bankruptcy proceeding is not a domestic relations matter.12 The Bankruptcy Code itself distinguishes between a federal bankruptcy proceeding, commenced by filing 7Declaration Pursuant to 28 U.S.C. § 1746 of R. Joseph Naus (“Naus”) at ¶ 1. 8Id. at ¶ 2. 9Id. at ¶ 3. 10Id. at ¶ 4. 11Id. at ¶ 5. 12Under the so-called Domestic Relations Exception, federal courts, including bankruptcy courts, have uniformly declined jurisdiction in cases involving divorce, alimony, or child custody. See In re Burrus, 135 U.S. 586, 593-94 (1890)(first adopting the exception); Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992)(addressing the scope of the exception). Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 9 of 25 PageID #: 846 - 6 - a petition in bankruptcy court under chapter 11 of the United States Code, and a state- court domestic relations matter. Specifically, section 362(b)(2), which addresses the automatic stay in bankruptcy, states that the filing of a bankruptcy petition does not operate as a stay of the commencement or continuation of a civil matter: (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence. 11 U.S.C. § 362(b)(2). Thus, when one spouse files for bankruptcy, “[a]ll interests of the debtor and the debtor's spouse in community property as of the commencement of the case” become assets of the bankruptcy estate, subject to the claims of the creditors under the Bankruptcy Code, but domestic relations matters (e.g., divorce, custody, and support) remain the exclusive purview of the state courts. 11 U.S.C. § 541(a)(2). To the extent of his or her community assets, the non-debtor spouse becomes a residual equity owner of the bankruptcy estate. The non-debtor spouse may also assert his or her own claims, in contract or tort, against the bankruptcy estate in the capacity of a general unsecured creditor. See, e.g., In re Provenza, 316 B.R. 177, 216 (E.D. La. Bankr. 2003)(providing for the inequitable distribution of the residual assets of bankruptcy estate, e.g., 70 percent to the non-debtor wife and 30 percent to the bankrupt husband, to account for husband’s fraud and mismanagement of the community). When a Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 10 of 25 PageID #: 847 - 7 - bankruptcy case is commenced by one spouse during the pendency of a state-court divorce proceeding in a community property state—which is what happened in this case— the jurisdiction of the state divorce court over the couple’s community assets is suspended until all of creditors in the bankruptcy are paid in accordance with the priorities set forth in the Bankruptcy Code. See 2 Bankruptcy Desk Guide § 12:15 (“Co-owned property—Community Property—Effect of divorce”). After the bankruptcy court satisfies the creditors’ claims, whether via liquidation or reorganization, jurisdiction over any remaining community property will be returned to the state divorce court for division pursuant to state law. Id. See also In re Teel, 34 B.R. 762 (B.A.P. 9th Cir. 1983)(explaining the interplay between bankruptcy and divorce). In the instant case, in 2004, five years before the commencement of the Bankruptcy Proceedings, Fox filed for divorce from Rosbottom in Dallas County, Texas (the “Divorce Action”).13 Fox was represented by Michael R. DeBruin (“DeBruin”), and Rosbottom was last represented by Joseph H. Amberson, III (“Amberson”)—both Texas divorce lawyers.14 Early in the proceeding, the judge presiding over the Divorce Action awarded the parties joint custody of their minor son, Christopher, and entered certain interim domestic support obligations in favor of Fox.15 However, under Texas law, a final divorce decree could not be entered until the parties’ community property was divided.16 13Declaration of Naus at ¶ 6. 14Id. at ¶ 7. 15Id. at ¶ 8. 16Texas law provides that a division of property may not be severed from a divorce action, even when one spouse files for bankruptcy during the pendency of a divorce action. See Reed v. Williams, 545 S.W.2d 33, 34 (Tex Civ. App.—San Antonio 1976)(providing that a trial court is prohibited by statute from Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 11 of 25 PageID #: 848 - 8 - Due to Rosbottom’s defiance of the judge’s orders and continued obstructionism, the parties had not been able to divide their sizable community assets.17 For instance, during the course of the Divorce Action, Rosbottom had repeatedly disregarded the presiding judge’s orders by alienating and encumbering community property, refusing to provide accurate information concerning the community assets and liabilities, and refusing to cooperate with Fox’s attorneys and accountants.18 In addition, Rosbottom regularly failed to pay Fox her court-ordered interim domestic support obligations, which were her only means of support.19 In light of Rosbottom’s recalcitrance, on June 9, 2009, the Texas judge indicated that he intended to appoint a state-court receiver to oversee the parties’ community property.20 Within hours of the judge’s oral ruling, Rosbottom filed for bankruptcy in the Western District of Louisiana, presumably in an effort to circumvent the Texas judge’s actions.21 Thus, the aforementioned interplay between federal bankruptcy law and the state domestic action began. Upon the filing of the bankruptcy petition, Rosbottom and Fox’s community assets came under the jurisdiction of the bankruptcy court.22 Originally, Rosbottom acted as a severing property division from divorce action when party to pending divorce files for bankruptcy). 17See generally BR Docket No. 09-11674 at Rec. Doc. 156. 18Id. 19Id. 20Id. 21Id. 22See 11 U.S.C. § 541(a)(2). Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 12 of 25 PageID #: 849 - 9 - debtor in possession under chapter 11 of the Bankruptcy Code.23 Fox, in her capacity as the non-debtor spouse, became a residual equity owner of the bankruptcy estate. Fox needed bankruptcy counsel in Louisiana who had experience in representing creditors in complex bankruptcy proceedings to investigate Rosbottom’s actions, prosecute her claims, and defend her interests in the Bankruptcy Proceedings. Fox retained R. Joseph Naus (“Naus”) of Wiener, Weiss and David S. Rubin (“Rubin”) of Kantrow, Spaht, both of whom have extensive experience in representing bankruptcy creditors in the Western District of Louisiana.24 The administration of the Rosbottom bankruptcy estate lasted seven years.25 At the outset of the bankruptcy and for some time thereafter, Fox’s residual equity interest in the bankruptcy estate was of minimal or no value due to Rosbottom’s pre- and post- bankruptcy fraud and mismanagement, as well as the estate’s excessive liabilities and cash flow problems.26 When the Firms withdrew from representing Fox on April 13, 2016, 1966 record documents had been filed in the main bankruptcy proceeding alone (docket number 09-11674), and five adversary proceedings had been commenced.27 Although it is impossible to list every bankruptcy-related action undertaken by the Firms on Fox’s behalf, the Firms zealously represented her interest as a residual equity owner and 23See 11 U.S.C. § 1107. 24Declaration of Naus at ¶¶ 9-10. Neither Naus nor Rubin has any meaningful experience in domestic relations matters, and neither has ever been licensed to practice law in Texas where the Divorce Action was pending. Id. at ¶ 11. 25Id. at ¶ 12. 26Id. at ¶ 13. 27Id. at ¶ 14. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 13 of 25 PageID #: 850 - 10 - general unsecured creditor in the bankruptcy by, among other things ► investigating and bringing Rosbottom’s fraudulent conduct to light; ► enforcing the payment of the interim domestic support obligations that had been ordered in the Divorce Action; ► identifying significant community assets that had not been listed by Rosbottom on his bankruptcy schedules; ► securing the appointment of a bankruptcy examiner and then a chapter 11 trustee (the “Trustee”), to wrest control of the estate from Rosbottom; ► advising and assisting Fox in connection with Rosbottom’s criminal prosecution; ► prosecuting Fox’s claims against Rosbottom for fraud, mismanagement, and waste of their community; ► protecting Fox from the claims of the bankruptcy estate’s other creditors; ► filing and prosecuting multiple proofs of claim on behalf of Fox against the bankruptcy estate; and ► securing a chapter 11 plan of reorganization (the “Plan”) (i) that accounted for Rosbottom’s deleterious conduct by imposing an inequitable distribution of the bankruptcy estate’s equity in favor of Fox and (ii) that provided for the payment of a salary to Fox before the creditors were paid in full.28 Specifically, in order to satisfy Fox’s substantial claims as a general unsecured creditor against Rosbottom for fraud and mismanagement of the community, the Plan provided 28Id. at ¶ 15. As further discussed in Note 29, infra, an inequitable distribution occurs when, due to claims between the equity owners, the bankruptcy estate’s equity is not divided equally between the co- owners. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 14 of 25 PageID #: 851 - 11 - that Fox would receive 100 percent of the bankruptcy estate’s equity after (i) all of the remaining creditors’ claims were paid and (ii) subject to the Plan’s numerous other terms and conditions.29 Among its numerous terms and conditions, the Plan provided that Fox could not own the gaming assets of the bankruptcy estate unless she obtained a final divorce decree from Rosbottom.30 This condition was included in the Plan by the Trustee at the 29See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44-48. Via a separate adversary proceeding (docket number 10-1003) filed by the Firms on behalf of Fox, Fox sought a judgment against Rosbottom for her own damages as a result of his fraud and mismanagement of the community. See Rosbottom v. Rosbottom, No. 10-BR-01003 (W.D. La. filed Jan. 7, 2010) at Rec. Doc. 1. In that proceeding, Fox eventually obtained a partial summary judgment against Rosbottom for “at least $16,445,956.94.” Id. at Rec. Doc. 104. The judgment, dated May 12, 2011, read in pertinent part: 1. Actions taken by [Rosbottom] damaged the community property estate existing between [Fox] and [Rosbottom] in at least the amount of $16,445,956.94 as set forth on the exhibit attached to this judgment and order (the “Partial Summary Judgment Damage Amount”). 2. The Partial Summary Judgment Damage Amount was caused by the actual and/or constructive fraud of [Rosbottom]. 3. In the event that the bankruptcy estate of [Rosbottom] results in an equity distribution to [Fox] and [Rosbottom] after payment of the claims of all creditors (administrative and otherwise) (the “Equity Distribution”), then [Fox] shall be entitled to payment of the first proceeds payable to the Equity Distribution up to the Partial Summary Judgment Damage Amount prior to any payment to Harold L. Rosbottom, Jr.. Id. The entry of the aforementioned judgment precipitated a settlement between Rosbottom and Fox, whereby the parties agreed that Fox’s claim against the bankruptcy estate would be satisfied by an inequitable distribution of the estate’s residual equity, with Fox receiving 75 percent and Rosbottom receiving 25 percent. Id. at Rec. Doc. 106. However, when the Firm’s subsequently discovered that Rosbottom had hidden additional community assets, they successfully moved to set aside the settlement. Id. Ultimately, at the Firms’ suggestion and in light of Rosbottom’s conduct, the Trustee proposed a plan reorganization that would have the effect of vesting 100 percent of the bankruptcy estate’s residual equity in Fox. See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44-48. As detailed in the victim statement that Fox submitted to the Honorable Donald W. Walter on December 2, 2012, in connection with Rosbottom’s sentencing, she believed her actual damages on account of Rosbottom’s conduct exceeded $28 million. Declaration of Naus at ¶ 16. 30See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44-48. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 15 of 25 PageID #: 852 - 12 - request of the Louisiana Gaming Control Board, which wanted to end Rosbottom’s association with the bankruptcy estate’s gaming assets due to his conviction for bankruptcy fraud and money laundering.31 In April of 2013, Fox, appearing through her Texas divorce lawyer DeBruin, filed a motion in the Divorce Action for the entry of a final divorce decree.32 A hearing in the Divorce Action was held on May 17, 2013, at which time the Texas judge entered a final decree of divorce.33 In the final divorce decree, the Texas divorce judge adopted the Plan as the community property division, finding, that, in accordance with Texas law, the Plan “provided a mechanism that results in a just and right division of the marital estate of the parties.”34 Following the confirmation of the Plan, 31See Declaration of Naus at ¶¶ 17-18. Importantly, the Plan’s confirmation was not conditioned upon Fox’s obtaining a divorce. However, under the Plan’s terms and conditions, if she wanted to own and operate the bankruptcy estate’s gaming assets—as opposed to sell them—then she would have to obtain a divorce from Rosbottom. Specifically, the Plan’s final divorce decree requirement provided: After entry of a final unappealable divorce decree and community partition (“Divorce Condition”), the Trustee will agree to transfer the membership interests of ABC Holding, LLC to [Fox], subject to the terms of this Plan in full satisfaction of and in exchange for her Class 20 Interest, with such membership interest transfer to be effective as of the Final Effective Date. [Fox] shall be entitled to receive the distributions provided for in the Financial Projections, as funds are available, on account of her membership interests in ABC Holding, LLC, subject to the terms of this Plan. Prior to the Divorce Condition, Leslie F. Rosbottom shall have no right or claim, vested otherwise, to the membership interests in ABC Holding, LLC, by sale, exchange, transfer or otherwise. See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44. ABC Holdings, LLC, later renamed Louisiana Truck Stop and Gaming, LLC, was the holding company into which the Trustee had consolidated the bankruptcy estate’s gaming asset. See Declaration of Naus at ¶ 19. 32Id. at ¶ 20. 33Id. at ¶ 21. The final divorce decree was entered an incredible nine years after Fox originally filed the Divorce Action. Id. at ¶ 22. Following Rosbottom’s conviction, Amberson had withdrawn from the Divorce Action, leaving Rosbottom unrepresented. Id. at ¶ 23. However, Rosbottom, was provided with notice of the final divorce hearing both through his criminal defense attorney and personally at jail, but failed to appear. Id. at ¶ 24. 34Id. at ¶ 25. Under Texas law, the Texas divorce judge was obligated to divide the parties’ community assets and liabilities, irrespective of whether one of the spouses had filed for bankruptcy. See Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 16 of 25 PageID #: 853 - 13 - the Firms continued to assist Fox in several critical and material respects, including: ► helping her search for a partner who was willing to purchase a portion of her residual interest in the bankruptcy estate;35 ► identifying and securing two bank loans that were necessary to pay off the remaining creditors of the bankruptcy estate, thereby ensuring that she would ultimately come into complete control of the assets of the bankruptcy estate, free and clear of the terms and conditions of Plan and the Trustee’s expensive administration; and ► representing her interest in the transactions whereby V.T.C.A., Family Code § 7.002 (“[I]n a decree of divorce or annulment, the court shall order a division of the [parties’] . . . community property”); Reed v. Williams, 545 S.W.2d 33, 34 (Tex. App. 1976)(holding that a trial court is prohibited from severing property division from divorce action even when a party to a pending divorce action files for bankruptcy). The Texas court’s final decree of divorce stated: IT IS ORDERED AND DECREED that the assets and liabilities of the marital estate of [Fox], petitioner, and [Rosbottom], respondent are divided and awarded in accordance with the Order Confirming the Plan and the [Plan of Reorganization as proposed by Gerald H. Schiff, trustee under chapter 11 of the Bankruptcy Code, dated November 30, 2012, as amended effective March 20, 2013, and as immaterially modified] itself, and subject to the terms and conditions set forth therein, any other documents referred to therein, and any orders of the Bankruptcy Court that may be made incident thereto after the date this decree is signed by the Court. Declaration of Naus at ¶ 26 (emphasis added). It should be noted that in satisfying Fox’s claims against Rosbottom, the bankruptcy court did not “divide” the parties’ community property in the sense that a state court divides community assets and community liabilities in connection with a divorce proceeding. Unlike a state court partition of community property, the Bankruptcy Code requires all creditors to be paid before there are any distributions to equity. In a state court community property partition, however, assets are divided as well as liabilities, with indemnities between the spouses for the community debts that each spouse assumes. See Fibich and Floyd, Impact of Bankruptcy on Family Law, 29 S. Tex. L. Rev. 637, 646 (1988)(“No cases have been decided in which a bankruptcy court divided property between the spouses as divorce courts do. Case law exists, however, where the bankruptcy courts have found they had jurisdiction to determine the interests of spouses in property, but have elected to abstain from deciding these issues altogether based on the rationale that divorce and domestic relations are areas traditionally left to the states”). 35With the Firms’ assistance, Fox interviewed several potential partners who were interested in buying some or all of the bankruptcy estate’s gaming assets. However, the terms offered by those potential investors were not deemed acceptable by Fox. See Declaration of Naus at ¶ 28. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 17 of 25 PageID #: 854 - 14 - the residual assets of the bankruptcy estate would ultimately be conveyed from the Trustee’s control to her own.36 Had the Firms not agreed to represent Fox on a contingency fee basis when she could not afford counsel, then Rosbottom’s misdeeds might have gone unpunished, and Fox’s rights as a creditor in Rosbottom’s bankruptcy would have gone unvindicated. Bankruptcy is exclusively a matter of federal law. Although the bankruptcy court obtained jurisdiction over Rosbottom and Fox’s community property assets, the bankruptcy court did not, thereby, become a domestic relations court and never had any jurisdiction over the parties’ divorce, support, or custody issues. From the perspective of the United States Bankruptcy Court, Fox was a residual equity owner by virtue of her co- ownership of the assets of bankruptcy estate.37 That the legal basis for Fox’s co- ownership was the community of acquets and gains arising under Texas law by virtue of her marriage to Rosbottom does not, and should not, ipso facto, transform the Bankruptcy Proceedings into domestic relations matters for the purposes of Rule 1.5(d)(1).38 No case has ever held as much, and applying the rule to the Firms’ representation of Fox in the Bankruptcy Proceedings would be an unwarranted expansion of the rule, especially when the rationale for the rule is so plainly absent.39 This view is shared by the American Bar 36Id. at ¶ 27. 37Just like any other co-owner, Fox had the right to receive notice of any use, sale, or lease of community property by the estate and a right of first refusal. See 11 U.S.C. § 363(i). 38Similarly, that the Firms, acting on behalf of Fox, were able to obtain recompense for Rosbottom’s waste and mismanagement of the community through the inequitable distribution of the bankruptcy estate does not somehow render the bankruptcy proceeding a “domestic relations matter” within the meaning of Rule 1.5(d)(1). 39The Louisiana State Bar Association’s Rules of Professional Conduct Committee has explained in an advisory opinion that Rule 1.5(d)(1) Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 18 of 25 PageID #: 855 - 15 - Association’s Lawyers’ Manual on Professional Conduct, which, in addressing the scope and applicability of Rule 1.5(d)(1)’s exception, explains: “Lawsuits that could loosely be called domestic relations or family law matters but that do not involve the obtaining of a divorce, alimony, or child support are not subject to the ethical prohibition on contingency fees.”40 This commonsense interpretation should govern here, and the court should, as a matter of law, enter partial summary judgment, holding that Rule 1.5(d)(1)’s exception is inapplicable to the Firms’ contingency fee agreement with Fox. (2) Fox’s Contingency Fee Agreement with the Firms Was Not Conditioned upon Fox’s Securing a Divorce. Even if the bankruptcy proceeding somehow constituted a “domestic relations [p]rohibits the use of contingency fee agreements in certain domestic relations matters reflecting public-policy concerns promoting reconciliation and protecting overreaching in highly emotional situations. If the contingency fee were allowed prior to the divorce or prior to setting the amount of child or spousal support, the lawyer's interest in obtaining the fee could influence his advice on reconciliation issues, promoting divorce and hindering reconciliation, and his advice on setting the amount of support, thus creating a conflict of interest with a vulnerable client. . . . Once the divorce is final and the amount of support is set, there is no public policy consideration prohibiting a contingent fee in collection efforts on a past-due amount, or in community property matters that are not tied to setting support. The contingency fee could be a useful tool for an impoverished client to collect on past-due support or obtain a share of community property. While the client may not be able to hire an attorney by paying an advance deposit with an hourly rate, the client may be able to obtain an attorney who will defer payment until collection of the arrearages or obtaining a share of the property. Public Opinion 05-002, 53 La. B.J. 136 at 152 (emphasis added). Thus, when the rationale for Rule 1.5(d)(1)’s prohibition—promoting reconciliation and protecting overreaching in highly emotional situations—is not present, contingency fee agreements may serve a useful and beneficial purpose. 40ABA/BNA Lawyers’ Manual on Professional Conduct at § 41:919 (2016). Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 19 of 25 PageID #: 856 - 16 - matter” under Rule 1.5(d)(1)—which is denied for the foregoing reasons—the Firms’ contingency fee agreement with Fox was never conditioned upon Fox’s securing a divorce. When it became clear that Fox did not have the means to pay the Firms for their services at their stated hourly rates, she agreed to convert to a contingency fee agreement, whereby the Firms would continue to represent her in exchange for 35 percent (subsequently increased to 40 percent) of any distributions that she might receive from Rosbottom’s bankruptcy estate.41 Pursuant to Louisiana Rule of Professional Conduct 1.5(c), the Firms and Fox reduced their contract to writing.42 The Firms were engaged to represent Fox in the Bankruptcy Proceedings. The Firms’ fee under the contingency fee agreement was not conditioned upon Fox’s securing a divorce as required by Rule 1.5(d)(1). In fact, the agreements themselves made no mention of a divorce and would not have, inasmuch as Fox’s marital status was immaterial to the Firms’ representation or fee.43 The only contingency upon which the Firms’ fee was conditioned was that of Fox receiving a distribution, whether in cash or property, from Rosbottom’s bankruptcy estate.44 Under the Bankruptcy Code, the only way Fox could obtain a distribution from the bankruptcy estate (other than the estate’s payment of her Texas court-ordered domestic support obligations) was for the estate to satisfy the claims of its numerous creditors, at which point any remaining assets would be distributed to the 41See Rec. Docs. 1-4 & 1-5. 42Id. 43Id. 44See Declaration of Naus at ¶29. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 20 of 25 PageID #: 857 - 17 - equity owners (i.e., Rosbottom and Fox).45 At the outset of the Bankruptcy Proceeding and for a considerable amount of time thereafter, it remained highly uncertain whether any distributions would ever be made to the equity owners in light of the bankruptcy estate’s excessive debts and cash flow problems.46 Fox’s right vel non to obtain a distribution from the bankruptcy estate had nothing whatsoever to do with whether she was married or divorced. The Bankruptcy Code does not impose such a condition. In fact, although highly unlikely after twelve years of protracted litigation with her former husband, Fox could have elected to remain married to Rosbottom and still would have been entitled to receive a distribution from the bankruptcy estate, subject to the satisfaction of the creditors’ claims. In this instance, it was Fox who, with the guidance and counsel of the Firms, ultimately decided to retain the bankruptcy estate’s gaming assets instead of selling them at what would have been a bargain basement price, and the Trustee tailored the Plan accordingly.47 In order for Fox to own the gaming assets, the Louisiana Gaming Control Board required that she obtain a final divorce decree from Rosbottom.48 This third-party regulatory requirement was incorporated into the Plan, and Fox accepted it.49 However, her securing a divorce from Rosbottom was never a condition precedent to her receiving a distribution from the bankruptcy estate. 45Id. at ¶ 30. 46Id. at ¶ 31, 47Id. at ¶ 32. 48Id. at ¶ 33. 49Id. at ¶ 34. Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 21 of 25 PageID #: 858 - 18 - Consequently, there is no nexus between the Firms’ entitlement to a contingency fee (conditioned on Fox receiving a distribution from the bankruptcy estate) and the Louisiana Gaming Control Board divorce requirement under the Plan. The third-party divorce requirement was effectively inserted into the Plan as an accommodation to Fox in the event she elected to retain the ownership of the gaming assets and is not germane to the Firms’ fee agreement. Fox’s suggestion that the Firms’ fee was somehow contingent upon her securing a divorce is wrong and ignores (i) the collateral aspect of the Plan’s final divorce decree requirement and (ii) the fact that the Divorce Action was at all time a separate and independent matter pending in Texas in which Fox was represented by Texas counsel. (3) Fox’s Contingency Fee Agreement with the Firms Was Not Conditioned on Fox’s Obtaining a Property Settlement in Lieu of Alimony or Support. It is axiomatic that the Firms’ contingency fee agreement was not conditioned upon Fox obtaining a property settlement in lieu of alimony or support. Divorce, division of the community, custody, alimony, and support were, at all times, exclusively the province of the state-court Divorce Action. Consequently, Rule 1.5(d)(1)’s final condition is of no moment. C. Fox Needed and Benefited from Her Contingency Fee Agreement with the Firms; There Is No Reason to Find Rule 1.5(d)(1) Applicable. When Fox first retained the Firms to represent her in the Bankruptcy Proceedings, she had little or no means by which to support herself after having been financially victimized by Rosbottom for over five years. The Firms zealously represented Fox for the Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 22 of 25 PageID #: 859 - 19 - next seven years, first on an hourly basis without ever having sent her a bill and then on a contingency fee basis when it became apparent that she did not have the means to pay for an attorney. The Firms succeeded spectacularly in that representation, overcoming numerous and substantial obstacles ultimately to see Fox placed into possession of 100 percent of the bankruptcy estate’s equity, free and clear of the Plan and the Trustee. Due to the Firms’ tireless efforts in championing her rights at every turn, Fox is now the sole owner of a prosperous business with a significant market value. Incredibly, instead of honoring her contingency fee agreement with the Firms, Fox has undertaken a thinly- veiled attempt to renegotiate (or even free herself from) the fee. Fox’s contention that Rule 1.5(d)(1) applies to relieve her from her obligation to the Firms is specious. No case has applied the rule to a bankruptcy proceeding, and to do so here would be to try to force a square peg into a round hole. In this instance, the rationale for Rule 1.5(d)(1)’s prohibition against contingency fees in domestic relations matters is not present, whereas the overarching raison d'être for contingency fee agreements in general undoubtedly is. As the Louisiana Supreme Court has observed, “[c]ontingency fee contracts . . . have the desirable effect of encouraging lawyers to represent clients with meritorious claims that the clients could not otherwise afford to litigate.”50 50See Succession of Cloud, 530 So. 2d 1146, 1150 (La. 1988). Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 23 of 25 PageID #: 860 - 20 - IV. CONCLUSION Based on the foregoing, the court should grant the Firms’ motion for partial summary judgment and hold that Rule 1.5(d)(1)’s prohibition does not apply to the Firms’ contingency fee agreement with Fox. COOK, YANCEY, KING & GALLOWAY A Professional Law Corporation By: s/ Herschel R. Richard, Jr. Herschel E. Richard, Jr. #11229 John T. Kalmbach #24484 David J. Hemken #35168 333 Texas Street, Suite 1700 P. O. Box 22260 Shreveport, LA 71120-2260 Telephone: (318) 221-6277 Telecopier: (318) 227-7850 herschel.richard@cookyancey.com john.kalmbach@cookyancey.com david.hemken@cookyancey.com ATTORNEYS FOR WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 24 of 25 PageID #: 861 - 21 - CERTIFICATE I HEREBY CERTIFY that a copy of the above and foregoing was filed with the United States District Court for the Western District of Louisiana by electronic case filing/case management and that a copy of the same was served on opposing counsel by either electronic notification or by U.S. mail, postage pre-paid. Shreveport, Louisiana, this 10th day of February, 2017. s/Herschel E. Richard, Jr. OF COUNSEL Case 5:16-cv-00850-SMH-KLH Document 43-2 Filed 02/10/17 Page 25 of 25 PageID #: 862 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) CIVIL ACTION NO. 16:850 VERSUS JUDGE HICKS LESLIE B. FOX MAGISTRATE JUDGE HAYES STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE APPLICABILITY OF LOUISIANA RULE OF PROFESSIONAL CONDUCT 1.5(d)(1) Pursuant to Local Rule 56.2, plaintiffs WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, and KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION), submit the following statement of uncontested facts in support of their motion for partial summary judgment on the applicability of Louisiana Rule of Professional Conduct 1.5(d)(1): (1) Leslie B. Fox (“Fox”) is the former wife of Harold L. Rosbottom, Jr. (“Rosbottom”). See Declaration Pursuant to 28 U.S.C. § 1746 of R. Joseph Naus (“Naus”) at ¶ 1. (2) In 2009, Fox retained Wiener, Weiss & Madison, A Professional Law Corporation, and Kantrow, Spaht, Weaver & Blitzer (A Professional Law Corporation)(collectively, the “Firms”) to represent her interests in two related bankruptcy proceedings, viz.: (a) a chapter 11 bankruptcy filed by Rosbottom, see In re Harold L. Rosbottom, Jr., No. 09-BR-11674 (W.D. La. filed June 9, 2009) (“BR Docket No. 09-11674”); and (b) a chapter 11 bankruptcy proceeding filed by Caddo- Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 1 of 10 PageID #: 863 - 2 - Bossier Gaming Company, LLC (an entity owned by Fox and Rosbottom), see In re Caddo-Bossier Gaming Company, LLC, No. 09-BR-11673 (W.D. La. filed June 9, 2009); (collectively, the “Bankruptcy Proceedings”). Id. at ¶ 2. (3) When Rosbottom commenced the Bankruptcy Proceedings, Fox and Rosbottom had been involved in an extremely contentious divorce proceeding that had been pending in Dallas County, Texas, for over five years. Id. at ¶ 3. (4) The Firms represented Fox as a non-debtor spouse in the Bankruptcy Proceedings. Id. at ¶ 4. (5) As a non-debtor spouse in bankruptcy with her own claims against Rosbottom for fraud and mismanagement, Fox was both a residual equity owner and general unsecured creditor of the Rosbottom bankruptcy estate. Id. at ¶ 5. (6) In 2004, five years before the commencement of the Bankruptcy Proceedings, Fox filed for divorce from Rosbottom in Dallas County, Texas (the “Divorce Action”). Id. at ¶ 6. (7) Fox was represented by Michael R. DeBruin (“DeBruin”), and Rosbottom was last represented by Joseph H. Amberson, III (“Amberson”)—both Texas divorce lawyers. Id. at ¶ 7. (8) Early in the proceeding, the judge presiding over the Divorce Action awarded the parties joint custody of their minor son, Christopher, and entered certain interim domestic support obligations in favor of Fox. Id. at ¶ 8. (9) Due to Rosbottom’s defiance of the judge’s orders and continued obstructionism, the parties had not been able to divide their sizable community assets. See generally BR Docket No. 09-11674 at Rec. Doc. 156. (10) For instance, during the course of the Divorce Action, Rosbottom had repeatedly disregarded the presiding judge’s orders by alienating and encumbering community property, refusing to provide accurate information concerning the community assets and liabilities, and refusing to cooperate with Fox’s attorneys and accountants. Id. (11) In addition, Rosbottom regularly failed to pay Fox her court-ordered interim domestic support obligations, which were her only means of support. Id. (12) In light of Rosbottom’s recalcitrance, on June 9, 2009, the Texas judge indicated that he intended to appoint a state-court receiver to oversee the parties’ community Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 2 of 10 PageID #: 864 - 3 - property. Id. (13) Within hours of the judge’s oral ruling, Rosbottom filed for bankruptcy in the Western District of Louisiana, presumably in an effort to circumvent the Texas judge’s actions. Id. (14) Fox needed bankruptcy counsel in Louisiana who had experience in representing creditors in complex bankruptcy proceedings to investigate Rosbottom’s actions, prosecute her claims, and defend her interests in the Bankruptcy Proceedings. Fox retained R. Joseph Naus (“Naus”) of Wiener, Weiss and David S. Rubin (“Rubin”) of Kantrow, Spaht, both of which have extensive experience in representing bankruptcy creditors in the Western District of Louisiana. See Declaration of Naus at ¶¶ 9-10. (15) Neither Naus nor Rubin has any meaningful experience in domestic relations matters, and neither has ever been licensed to practice law in Texas where the Divorce Action was pending. Id. at ¶ 11. (16) The administration of the Rosbottom bankruptcy estate lasted seven years. Id. at ¶ 12. (17) At the outset of the bankruptcy and for some time thereafter, Fox’s residual equity interest in the bankruptcy estate was of minimal or no value due to Rosbottom’s pre- and post-bankruptcy fraud and mismanagement, as well as the estate’s excessive liabilities and cash flow problems. Id. at ¶ 13. (18) When the Firms withdrew from representing Fox on April 13, 2016, 1966 record documents had been filed in the main bankruptcy proceeding alone (docket number 09-11674), and five adversary proceedings had been commenced. Id. at ¶ 14. (19) The Firms zealously represented Fox interest as a residual equity owner and general unsecured creditor in the bankruptcy by, among other things: ► investigating and bringing Rosbottom’s fraudulent conduct to light; ► enforcing the payment of the interim domestic support obligations that had been ordered in the Divorce Action; ► identifying significant community assets that had not been listed by Rosbottom on his bankruptcy schedules; ► securing the appointment of a bankruptcy examiner Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 3 of 10 PageID #: 865 - 4 - and then a chapter 11 trustee (the “Trustee”), to wrest control of the estate from Rosbottom; ► advising and assisting Fox in connection with Rosbottom’s criminal prosecution; ► prosecuting Fox’s claims against Rosbottom for fraud, mismanagement, and waste of their community; ► protecting Fox from the claims of the bankruptcy estate’s other creditors; and ► securing a chapter 11 plan of reorganization (the “Plan”) (i) that accounted for Rosbottom’s deleterious conduct by imposing an inequitable distribution of the bankruptcy estate’s equity in favor of Fox and (ii) that provided for the payment of a salary to Fox before the creditors were paid in full. Id. at ¶ 15 (20) Specifically, in order to satisfy Fox’s substantial claims as a general unsecured creditor against Rosbottom for fraud and mismanagement of the community, the Plan provided that Fox would receive 100 percent of the bankruptcy estate’s equity after (i) all of the remaining creditors’ claims were paid and (ii) subject to the Plan’s numerous other terms and conditions. See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44-48. (21) Via a separate adversary proceeding (docket number 10-1003) filed by the Firms on behalf of Fox, Fox sought a judgment against Rosbottom for her own damages as a result of his fraud and mismanagement of the community. See Rosbottom v. Rosbottom, No. 10-BR-01003 (W.D. La. Filed Jan. 7, 2010) at Rec. Doc. 1. (22) In that proceeding, Fox eventually obtained a partial summary judgment against Rosbottom for “at least $16,445,956.94.” Id. at Rec. Doc. 104. (23) The judgment, dated May 12, 2011, read in pertinent part: 1. Actions taken by [Rosbottom] damaged the community property estate existing between [Fox] and [Rosbottom] in at least the amount of $16,445,956.94 as set forth on the exhibit attached to this judgment and order (the “Partial Summary Judgment Damage Amount”). Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 4 of 10 PageID #: 866 - 5 - 2. The Partial Summary Judgment Damage Amount was caused by the actual and/or constructive fraud of [Rosbottom]. 3. In the event that the bankruptcy estate of [Rosbottom] results in an equity distribution to [Fox] and [Rosbottom] after payment of the claims of all creditors (administrative and otherwise) (the “Equity Distribution”), then [Fox] shall be entitled to payment of the first proceeds payable to the Equity Distribution up to the Partial Summary Judgment Damage Amount prior to any payment to Harold L. Rosbottom, Jr.. Id. (24) The entry of the aforementioned judgment precipitated a settlement between Rosbottom and Fox, whereby the parties agreed that Fox’s claim against the bankruptcy estate would be satisfied by an inequitable distribution of the estate’s residual equity, with Fox receiving 75 percent and Rosbottom receiving 25 percent. Id. at Rec. Doc. 106. (25) When the Firm’s subsequently discovered that Rosbottom had hidden additional community assets, they successfully moved to set aside the settlement. Id. (26) Ultimately, at the Firms’ suggestion and in light of Rosbottom’s conduct, the Trustee proposed a plan reorganization that would have the effect of vesting 100 percent of the bankruptcy estate’s residual equity in Fox. See BR Docket No. 09- 11674 at Rec. Doc. 1745 at 44-48. (27) As detailed in the victim statement that Fox submitted to the Honorable Donald W. Walter on December 2, 2012, in connection with Rosbottom’s sentencing, she believed her actual damages on account of Rosbottom’s conduct exceeded $28 million. Declaration of Naus at ¶ 16. (28) Among its numerous terms and conditions, the Plan provided that Fox could not own the gaming assets of the bankruptcy estate unless she obtained a final divorce decree from Rosbottom. See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44- 48. (29) This condition was included in the Plan by the Trustee at the request of the Louisiana Gaming Control Board, which wanted to end Rosbottom’s association with the bankruptcy estate’s gaming assets due to his conviction for bankruptcy fraud and money laundering. See Declaration of Naus at ¶¶ 17-18. (30) The Plan’s final divorce decree requirement provided: Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 5 of 10 PageID #: 867 - 6 - After entry of a final unappealable divorce decree and community partition (“Divorce Condition”), the Trustee will agree to transfer the membership interests of ABC Holding, LLC to [Fox], subject to the terms of this Plan in full satisfaction of and in exchange for her Class 20 Interest, with such membership interest transfer to be effective as of the Final Effective Date. [Fox] shall be entitled to receive the distributions provided for in the Financial Projections, as funds are available, on account of her membership interests in ABC Holding, LLC, subject to the terms of this Plan. Prior to the Divorce Condition, Leslie F. Rosbottom shall have no right or claim, vested otherwise, to the membership interests in ABC Holding, LLC, by sale, exchange, transfer or otherwise. See BR Docket No. 09-11674 at Rec. Doc. 1745 at 44. (31) ABC Holdings, LLC, later renamed Louisiana Truck Stop and Gaming, LLC, was the holding company into which the Trustee had consolidated the bankruptcy estate’s gaming asset. See Declaration of Naus at ¶ 19. (32) In April of 2013, Fox, appearing through her Texas divorce lawyer DeBruin, filed a motion in the Divorce Action for the entry of a final divorce decree. Id. at ¶ 20. (33) A hearing in the Divorce Action was held on May 17, 2013, at which time the Texas judge entered a final decree of divorce. Id. at ¶ 21. (34) The final divorce decree was entered nine years after Fox originally filed the Divorce Action. Id. at ¶ 22. (35) Following Rosbottom’s conviction, Amberson had withdrawn from the Divorce Action, leaving Rosbottom unrepresented. Id. at ¶ 23. (36) However, Rosbottom, was provided with notice of the final divorce hearing both through his criminal defense attorney and personally at jail, but failed to appear. Id. at ¶ 24. (37) In the final divorce decree, the Texas divorce judge adopted the Plan as the community property division, finding, that, in accordance with Texas law, the Plan “provided a mechanism that results in a just and right division of the marital estate of the parties.” Id. at ¶ 25. (38) The Texas court’s final decree of divorce stated: IT IS ORDERED AND DECREED that the assets and Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 6 of 10 PageID #: 868 - 7 - liabilities of the marital estate of [Fox], petitioner, and [Rosbottom], respondent are divided and awarded in accordance with the Order Confirming the Plan and the [Plan of Reorganization as proposed by Gerald H. Schiff, trustee under chapter 11 of the Bankruptcy Code, dated November 30, 2012, as amended effective March 20, 2013, and as immaterially modified] itself, and subject to the terms and conditions set forth therein, any other documents referred to therein, and any orders of the Bankruptcy Court that may be made incident thereto after the date this decree is signed by the Court. Id. at ¶ 26 (emphasis added). (39) Following the confirmation of the Plan, the Firms continued to assist Fox in several critical and material respects, including, but not limited to ► helping her search for a partner who was willing to purchase a portion of her residual interest in the bankruptcy estate; ► identifying and securing two bank loans that were necessary to pay off the remaining creditors of the bankruptcy estate, thereby ensuring that she would ultimately come into complete control of the assets of the bankruptcy estate, free and clear of the terms and conditions of Plan and the Trustee’s expensive administration; and ► representing her interest in the transactions whereby the residual assets of the bankruptcy estate would ultimately be conveyed from the Trustee’s control to her own. Id. at ¶ 27. (40) With the Firms’ assistance, Fox interviewed several potential partners who were interested in buying some or all of the bankruptcy estate’s gaming assets. However, the terms offered by those potential investors were not deemed acceptable by Fox. Id. at ¶ 28. (41) When it became clear that Fox did not have the means to pay the Firms for their services at their stated hourly rates, she agreed to convert to a contingency fee agreement, whereby the Firms would continue to represent her in exchange for 35 percent (subsequently increased to 40 percent) of any distributions that she might Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 7 of 10 PageID #: 869 - 8 - receive from Rosbottom’s bankruptcy estate. See Rec. Docs. 1-4 & 1-5. (42) The Firms and Fox reduced their contract to writing. Id. (43) The Firms were engaged to represent Fox in the Bankruptcy Proceedings. The Firms’ fee under the contingency fee agreement was not conditioned upon Fox’s securing a divorce as required by Rule 1.5(d)(1). In fact, the agreements themselves made no mention of a divorce and would not have, inasmuch as Fox’s marital status was immaterial to the Firms’ representation or fee. Id. (44) The only contingency upon which the Firms’ fee was conditioned was that of Fox receiving a distribution, whether in cash or property, from Rosbottom’s bankruptcy estate. See Declaration of Naus at ¶29. (45) Under the Bankruptcy Code, the only way Fox could obtain a distribution from the bankruptcy estate (other than the estate’s payment of her Texas court-ordered domestic support obligations) was for the estate to satisfy the claims of its numerous creditors, at which point any remaining assets would be distributed to the equity owners (i.e., Rosbottom and Fox). Id. at ¶ 30. (46) At the outset of the Bankruptcy Proceeding and for a considerable amount of time thereafter, it remained highly uncertain whether any distributions would ever be made to the equity owners in light of the bankruptcy estate’s excessive debts and cash flow problems. Id. at ¶ 31. (47) It was Fox who, with the guidance and counsel of the Firms, ultimately decided to retain the bankruptcy estate’s gaming assets instead of selling them at what would have been a bargain basement price, and the Trustee tailored the Plan accordingly. Id. at ¶ 32. (48) In order for Fox to own the gaming assets, the Louisiana Gaming Control Board required that she obtain a final divorce decree from Rosbottom. Id. at ¶ 33. (49) This third-party regulatory requirement was incorporated into the Plan, and Fox accepted it. Id. at ¶ 34. Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 8 of 10 PageID #: 870 - 9 - COOK, YANCEY, KING & GALLOWAY A Professional Law Corporation By: s/ Herschel R. Richard, Jr. Herschel E. Richard, Jr. #11229 John T. Kalmbach #24484 David J. Hemken #35168 333 Texas Street, Suite 1700 P. O. Box 22260 Shreveport, LA 71120-2260 Telephone: (318) 221-6277 Telecopier: (318) 227-7850 herschel.richard@cookyancey.com john.kalmbach@cookyancey.com david.hemken@cookyancey.com ATTORNEYS FOR WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 9 of 10 PageID #: 871 - 10 - CERTIFICATE I HEREBY CERTIFY that a copy of the above and foregoing was filed with the United States District Court for the Western District of Louisiana by electronic case filing/case management and that a copy of the same was served on opposing counsel by either electronic notification or by U.S. mail, postage pre-paid. Shreveport, Louisiana, this 10th day of February, 2017. s/Herschel E. Richard, Jr. OF COUNSEL Case 5:16-cv-00850-SMH-KLH Document 43-3 Filed 02/10/17 Page 10 of 10 PageID #: 872 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION WIENER, WEISS & MADISON, A PROFESSIONAL CORPORATION, AND KANTROW, SPAHT, WEAVER & BLITZER (A PROFESSIONAL LAW CORPORATION) CIVIL ACTION NO. 16:850 VERSUS JUDGE HICKS LESLIE B. FOX MAGISTRATE JUDGE HAYES DECLARATION PURSUANT TO 28 U.S.C. § 1746 I, R. JOSEPH NAUS, do hereby declare under penalty of perjury that the foregoing is true and correct and based on my personal knowledge, information, and belief: (1) Leslie B. Fox (“Fox”) is the former wife of Harold L. Rosbottom, Jr. (“Rosbottom”). (2) In 2009, Fox retained Wiener, Weiss & Madison, A Professional Law Corporation, and Kantrow, Spaht, Weaver & Blitzer (A Professional Law Corporation)(collectively, the “Firms”) to represent her interests in two related bankruptcy proceedings, viz.: (a) a chapter 11 bankruptcy filed by Rosbottom, see In re Harold L. Rosbottom, Jr., No. 09-BR-11674 (W.D. La. filed June 9, 2009) (“BR Docket No. 09-11674”); and (b) a chapter 11 bankruptcy proceeding filed by Caddo- Bossier Gaming Company, LLC (an entity owned by Fox and Rosbottom), see In re Caddo-Bossier Gaming Company, LLC, No. 09-BR-11673 (W.D. La. filed June 9, 2009); (collectively, the “Bankruptcy Proceedings”). (3) When Rosbottom commenced the Bankruptcy Proceedings, Fox and Rosbottom had been involved in an extremely contentious divorce proceeding that had been pending in Dallas County, Texas, for over five years. Case 5:16-cv-00850-SMH-KLH Document 43-4 Filed 02/10/17 Page 1 of 6 PageID #: 873 - 2 - (4) The Firms represented Fox as a non-debtor spouse in the Bankruptcy Proceedings. (5) As a non-debtor spouse in bankruptcy with her own claims against Rosbottom for fraud and mismanagement, Fox was both a residual equity owner and general unsecured creditor of the Rosbottom bankruptcy estate. (6) In 2004, five years before the commencement of the Bankruptcy Proceedings, Fox filed for divorce from Rosbottom in Dallas County, Texas (the “Divorce Action”). (7) In the Divorce Action, Fox was represented by Michael R. DeBruin (“DeBruin”), and Rosbottom was last represented by Joseph H. Amberson, III (“Amberson”)— both Texas divorce lawyers. (8) Early in the proceeding, the judge presiding over the Divorce Action awarded the parties joint custody of their minor son, Christopher, and entered certain interim domestic support obligations in favor of Fox. (9) Fox needed bankruptcy counsel in Louisiana who had experience in representing creditors in complex bankruptcy proceedings to investigate Rosbottom’s actions, prosecute her claims, and defend her interests in the Bankruptcy Proceedings. (10) Fox retained the undersigned of Wiener, Weiss and David S. Rubin (“Rubin”) of Kantrow, Spaht, both of which have extensive experience in representing bankruptcy creditors in the Western District of Louisiana. (11) Neither the undersigned nor Rubin has any meaningful experience in domestic relations matters, and neither has ever been licensed to practice law in Texas where the Divorce Action was pending. (12) The administration of the Rosbottom bankruptcy estate lasted seven years. (13) At the outset of the bankruptcy and for some time thereafter, Fox’s residual equity interest in the bankruptcy estate was of minimal or no value due to Rosbottom’s pre- and post-bankruptcy fraud and mismanagement, as well as the estate’s excessive liabilities and cash flow problems. (14) When the Firms withdrew from representing Fox on April 13, 2016, 1966 record documents had been filed in the main bankruptcy proceeding alone (docket number 09-11674), and five adversary proceedings had been commenced. (15) The Firms’ representation of Fox’s interest as a residual equity owner and general unsecured creditor in the Bankruptcy Proceedings included, but was not limited to ► investigating and bringing Rosbottom’s fraudulent Case 5:16-cv-00850-SMH-KLH Document 43-4 Filed 02/10/17 Page 2 of 6 PageID #: 874 - 3 - conduct to light; ► enforcing the payment of the interim domestic support obligations that had been ordered in the Divorce Action; ► identifying significant community assets that had not been listed by Rosbottom on his bankruptcy schedules; ► securing the appointment of a bankruptcy examiner and then a chapter 11 trustee (the “Trustee”), to wrest control of the estate from Rosbottom; ► advising and assisting Fox in connection with Rosbottom’s criminal prosecution, including requesting the United States Attorney, on behalf of Fox, to open a criminal investigation of Rosbottom; ► prosecuting Fox’s claims against Rosbottom for fraud, mismanagement, and waste of their community; ► protecting Fox from the claims of the bankruptcy estate’s other creditors; and ► securing a chapter 11 plan of reorganization (the “Plan”) (i) that accounted for Rosbottom’s deleterious conduct by imposing an inequitable distribution of the bankruptcy estate’s equity in favor of Fox and (ii) that provided for the payment of a salary to Fox before the creditors were paid in full. (16) As detailed in the victim statement that Fox submitted to the Honorable Donald W. Walter in December 2, 2012, in connection with Rosbottom’s sentencing, she believed her actual damages on account of Rosbottom’s conduct exceeded $28 million. See “Exhibit A,” which is a true and authentic copy of the victim statement signed by Fox, which has been filed separately under seal. (17) Among its numerous terms and conditions, the Plan provided that Fox could not own the gaming assets of the bankruptcy estate unless she obtained a final divorce decree from Rosbottom. (18) This condition was included in the Plan by the Trustee at the request of the Louisiana Gaming Control Board, which wanted to end Rosbottom’s association with the bankruptcy estate’s gaming assets due to his conviction for bankruptcy fraud and money laundering. Case 5:16-cv-00850-SMH-KLH Document 43-4 Filed 02/10/17 Page 3 of 6 PageID #: 875 - 4 - (19) ABC Holdings, LLC, later renamed Louisiana Truck Stop and Gaming, LLC, was the holding company into which the Trustee had consolidated the bankruptcy estate’s gaming asset. (20) In April of 2013, Fox, appearing through her Texas divorce lawyer DeBruin, filed a motion in the Divorce Action for the entry of a final divorce decree. (21) A hearing in the Divorce Action was held on May 17, 2013, at which time the Texas judge entered a final decree of divorce. (22) The final divorce decree was entered nine years after Fox originally filed the Divorce Action. (23) Following Rosbottom’s conviction, Amberson had withdrawn from the Divorce Action, leaving Rosbottom unrepresented. (24) However, Rosbottom, was provided with notice of the final divorce hearing both through his criminal defense attorney and personally at jail, but failed to appear. (25) In the final divorce decree, the Texas divorce judge adopted the Plan as the community property division, finding, that, in accordance with Texas law, the Plan “provided a mechanism that results in a just and right division of the marital estate of the parties.” See “Exhibit B,” which is a true and correct copy of the Texas court’s final decree of divorce in the Divorce Action. (26) The Texas court’s final decree of divorce stated: IT IS ORDERED AND DECREED that the assets and liabilities of the marital estate of [Fox], petitioner, and [Rosbottom], respondent are divided and awarded in accordance with the Order Confirming the Plan and the [Plan of Reorganization as proposed by Gerald H. Schiff, trustee under chapter 11 of the Bankruptcy Code, dated November 30, 2012, as amended effective March 20, 2013, and as immaterially modified] itself, and subject to the terms and conditions set forth therein, any other documents referred to therein, and any orders of the Bankruptcy Court that may be made incident thereto after the date this decree is signed by the Court. Exhibit B (filed separately under seal). (27) Following the confirmation of the Plan, the Firms continued to assist Fox in several critical and material respects, including, but not limited to Case 5:16-cv-00850-SMH-KLH Document 43-4 Filed 02/10/17 Page 4 of 6 PageID #: 876 - 5 - ► helping her search for a partner who was willing to purchase a portion of her residual interest in the bankruptcy estate; ► identifying and securing two bank loans that were necessary to pay off the remaining creditors of the bankruptcy estate, thereby ensuring that she would ultimately come into complete control of the assets of the bankruptcy estate, free and clear of the terms and conditions of Plan and the Trustee’s expensive administration; and ► representing her interest in the transactions whereby the residual assets of the bankruptcy estate would ultimately be conveyed from the Trustee’s control to her own. (28) With the Firms’ assistance, Fox interviewed several potential partners who were interested in buying some or all of the bankruptcy estate’s gaming assets. However, the terms offered by those potential investors were not deemed acceptable by Fox. (29) The only contingency upon which the Firms’ fee was conditioned was that of Fox receiving a distribution, whether in cash or property, from Rosbottom’s bankruptcy estate. (30) Under the Bankruptcy Code, the only way Fox could obtain a distribution from the bankruptcy estate (other than the estate’s payment of her Texas court-ordered domestic support obligations) was for the estate to satisfy the claims of its numerous creditors, at which point any remaining assets would be distributed to the equity owners (i.e., Rosbottom and Fox). (31) At the outset of the Bankruptcy Proceeding and for a considerable amount of time thereafter, it remained highly uncertain whether any distributions would ever be made to the equity owners in light of the bankruptcy estate’s excessive debts and cash flow problems. (32) It was Fox who, with the guidance and counsel of the Firms, ultimately decided to retain the bankruptcy estate’s gaming assets instead of selling them at what would have been a bargain basement price, and the Trustee tailored the Plan accordingly. (33) In order for Fox to own the gaming assets, the Louisiana Gaming Control Board required that she obtain a final divorce decree from Rosbottom. Case 5:16-cv-00850-SMH-KLH Document 43-4 Filed 02/10/17 Page 5 of 6 PageID #: 877 Case 5:16-cv-00850-SMH-KLH Document 43-4 Filed 02/10/17 Page 6 of 6 PageID #: 878