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In Re Thomas W. Olick v. William C. House et al

December 17, 2012

IN RE THOMAS W. OLICK, DEBTOR. THOMAS W. OLICK, PLAINTIFF-APPELLANT,
v.
WILLIAM C. HOUSE ET AL., DEFENDANTS-APPELLEES.



The opinion of the court was delivered by: Yohn, J.

MEMORANDUM

This bankruptcy appeal arises from an adversary proceeding brought by Thomas W. Olick against his former bankruptcy attorney William C. House. Olick appeals from the bankruptcy court's June 28, 2011, order granting House's motion to dismiss Olick's complaint with prejudice. I conclude that the bankruptcy court's order of June 28, 2011, should be affirmed in part and reversed in part.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

As litigation between Olick and House extends over a decade, the factual and procedural history is extensive. The present adversarial action arises from House's representation of Olick in both Olick's 1996 chapter 13 bankruptcy proceedings and in two related National Association of Securities Dealers (NASD) arbitrations. Olick has filed three prior adversarial proceedings against House based on these representations and has previously challenged the fee awarded to House in the bankruptcy and NASD proceedings. Below is a summary of the relevant factual and procedural history.

Olick and his wife filed bankruptcy proceedings under chapter 13 on July 11, 1996. (Bankr. No. 96-22123, Doc. No. 1.) House became general bankruptcy counsel for Olick and his wife in the bankruptcy proceedings pursuant to a private written agreement on August 27, 1997. House continued to represent the Olicks in their bankruptcy proceedings until December 7, 1998, when House received a letter from Olick stating, "My wife and I are discharging you as our bankruptcy counsel. We find it impossible to work with you." (Appellee Br. App. I, Tab A.) House filed a motion to withdraw as bankruptcy counsel for the Olicks on January 20, 1999, and the court granted the motion on March 11, 1999. (Bankr. No. 96-22123, Doc. Nos. 293, 324.)

In addition to representing the Olicks in their bankruptcy proceedings, on April 29, 1997, House was appointed by an order of the bankruptcy court to serve as special counsel to the chapter 13 trustee, in a pair of related NASD arbitrations involving Olick.*fn1 (Appellee Br. App. I, Tab R.) Earlier that month Olick and House entered into a private retainer agreement regarding the NASD arbitrations. (Appellant Br. Ex. 6.) On May 20, 1998, House filed a motion with the bankruptcy court to withdraw as special counsel to the trustee in the NASD arbitrations. (Appellant Br. Ex. 12.) Although, the court never ruled on this motion, after May 20, 1998, House discontinued his representation of Olick in the NASD proceedings. (See Compl.¶¶ 29-32; see also Appellant Br. Ex. 13.) As special counsel in the NASD arbitrations, House was appointed by the bankruptcy court to represent Olick, who was suing various parties, including John Hancock Distributors, Inc. and John Hancock Mutual Life Ins.*fn2 (Id.; see also Compl. ¶ 5.) John Hancock Distributors, Inc., John Hancock Mutual Life Ins., and Larry Carter ("the Hancock parties") were dismissed from the NASD proceedings by an order of the district court on January 21, 1999.*fn3 (Appellee Br. App. I, Tab S 4.) (Docket No. 11-96-04460, Doc. Nos. 293, 324.) The NASD proceedings against the remaining parties concluded on July 20, 2001. (Appellee Br. App. I, Tab S.)

After filing his motion with the bankruptcy court to withdraw as bankruptcy counsel on January 20, 1999, House filed a fee application with the court on January 21, 1999. (Bankr. No. 96-22123, Doc. Nos. 293, 294.) In his fee application House requested payment for his representation during both the bankruptcy proceedings and the NASD arbitrations. See In re Olick, Case No. 96-22123T (Bankr. E.D. Pa. June 28, 2011).*fn4 Olick objected to the fee application. For over three years, Olick and House contested the fee award and on January 16, 2003, the bankruptcy court entered its final order awarding House fees for his representation of Olick from April 29, 1997, through December 7, 1998. (Bankr. No. 96-22123, Doc. No. 523).

Olick appealed the final order, but both the district court and the Third Circuit affirmed the bankruptcy court's award. See In re Olick, 311 F. App'x 529, 530 (3d Cir. 2008);

In re Olick, CIV.A. 03-6723, 2005 WL 331534 (E.D. Pa. Feb. 10, 2005), aff'd, 311 F. App'x 529 (3d Cir. 2008).

On March 22, 1999, two months after House filed his fee application, Olick initiated his first adversarial proceeding against House (House I). (Appellee Br. App. I, Tab B.) Olick alleged malpractice and breach of contract based on House's representation of Olick in the bankruptcy and related NASD proceedings. Olick's initial complaint was dismissed, and he filed an amended complaint on August 16, 1999. (Appellee Br. App. I, Tabs C, D.) On March 30, 2000, the bankruptcy court dismissed Olick's amended complaint in House I with prejudice. (Appellee Br. App. I, Tab E.) No appeal followed.

On March 28, 2002, Olick filed a second adversarial complaint against House alleging House breached their agreement by failing to produce documents related to House's fee application (House II). (Appellee Br. App. I, Tab F.) On January 12, 2009, the bankruptcy court dismissed the complaint for lack of subject-matter jurisdiction and because the claim was now moot due to the final resolution of the fee dispute. (Appellee Br. App. I, Tab G.) No appeal followed.

On March 3, 2003, Olick filed a third adversarial action against House (House III). (Appellee Br. App. I, Tab H.) The complaint in House III is almost identical to the complaint in the current case. In his House III complaint, Olick also alleged malpractice, breach of contract, breach of fiduciary duty, and fraudulent filing of fees based on House's representation of Olick in the bankruptcy and NASD proceedings. (Appellee Br. App. I, Tab H.) House moved to dismiss the complaint on April 4, 2003. (Docket for Adv. No. 03-2054. Bankr. 96-22123, Doc. No. 10.) The bankruptcy court did not rule on the motion until January 28, 2010, when the court dismissed the complaint for lack of jurisdiction. The bankruptcy court explained that because the administration of the bankruptcy case was complete, the court lacked subject-matter jurisdiction to determine the current adversarial claims. (Appellee Br. App. I, Tab I.) No appeal followed.

On February 4, 2010, less than a week after House III was dismissed, Olick filed the current adversarial action (House IV). (Docket for Adv. No. 10-0038. Bankr. 96-22123, Doc. No. 1). On April 1, 2010, House filed a motion to dismiss the complaint with prejudice. (Docket for Adv. No. 10-0038. Bankr. 96-22123, Doc. No. 18.) Unlike the bankruptcy court in House III, on June 28, 2011, the bankruptcy court in House IV determined that it had subject matter jurisdiction under 28 U.S.C. § 1334(b) because the proceeds of the litigation could provide funding for Olick's confirmed chapter 13 bankruptcy plan. Olick v. House (In re Olick) (House IV), Case No. 07-10880 ELF, Adv. No. 10-0038, 2011 WL 2565665 at *2 (Bankr. E.D. Pa. June 28, 2011). The court found that Olick's claims were barred by res judicata based on the final ruling in the fee dispute and in House I. See id. at 6. Consequently, the bankruptcy court granted House's motion and dismissed Olick's complaint with prejudice. See id. at 9. This appeal followed.

II. STANDARD OF REVIEW

District courts have jurisdiction to hear appeals from final judgments and orders of the bankruptcy courts. Under the Federal Rules of Bankruptcy Procedure, a district court, sitting as an appellate tribunal, "may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." Fed. R. Bankr. P. 8013. In so doing, the district court applies a clearly erroneous standard to review a bankruptcy court's factual ...


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