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Securities and Exchange Commission v. Path America, LLC

United States District Court, W.D. Washington, Seattle

January 13, 2020

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
PATH AMERICA, LLC, et al., Defendants and POTALA SHORELINE, LLC, et al., Relief Defendants.

          FINAL ORDER REGARDING FEE APPLICATIONS

          James L. Robart United States District Judge.

         Before the court are several final fee applications for fees and costs incurred in the final application period covering July 1, 2019, through December 4, 2019, and for payments previously held back from prior fee applications, including: (1) Receiver Michael A. Grassmueck's (“the Receiver”) final fee application for $1, 286.50 in fees, $884.20 in costs, and $134, 840.06 in holdbacks (Dkt. # 700); (2) Allen Matkins Leck Gamble Mallory & Natsis, LLP's (“Allen Matkins”)[1] final fee application for $35, 810.10 in fees, $2, 045.83 in costs, and $787, 295.79 in holdbacks (Dkt. # 701); (3) Financial Forensics'[2] final fee application for $3, 972.00 in fees, which includes a reasonable estimate of the fees necessary to assist with the filing of final tax returns, and $53, 577.34 in holdbacks (Dkt. # 702); (4) Peterson Sullivan LLP's (“Peterson Sullivan”)[3] final fee application for $15, 340.00 in fees, which includes a reasonable estimate of the fees necessary to assist with the filing of the Receivership's 2019 tax return, filing the final 2020 short-year tax return, and dealing with any Internal Revenue Service (“IRS”) correspondence, and $63, 854.77 in holdbacks (Dkt. # 703); (5) Baker Donelson's[4] final fee application for $661.00 in fees and $20, 978.17 in holdbacks (Dkt. # 704);[5] (6) Caron Architecture LLC's (“Caron”)[6] final fee application for $33, 948.29 in holdbacks (Dkt. # 705); and (7) Karr Tuttle Campbell, P.S.'s (“Karr Tuttle”)[7] final fee application for $3, 264.00 in fees and $61, 008.92 in holdbacks (Dkt. # 707).

         In addition to the foregoing final fee applications, the Receiver moves for an order (a) approving his final accounting and report; (b) granting him the authority to distribute the Receivership's proceeds to all claimants in accordance with his motion and the previously approved Distribution Plan;[8] (c) granting him the authority to destroy the books and records and delete the digital records of the Receivership Entities;[9] (d) granting him the authority to retain a reserve of $62, 350.00 to pay for any future costs to administer the distribution, file tax returns, destroy records, and the close the Receivership; (e) granting him the authority to proceed with BDO U.S.A., LLP (“BDO”) as the Receiver's tax accountant for the preparation and filing of the final tax returns for the Receivership Entities; (f) granting him the authority to pay any unclaimed funds or un-negotiated checks after 90 days and any funds received following the final distribution to the Securities and Exchange Commission (“SEC”) for turnover to the United States Treasury; and (g) and discharging the Receiver and his Professionals[10] from all further duties, liabilities and responsibilities upon the filing of a declaration that he has faithfully completed his duties as ordered (“Receiver's Final Motion”). (See Receiver's Final Mot. (Dkt. # 710).)

         As described below, the court GRANTS the fee applications of the Receiver, Allen Matkins, Financial Forensics, Peterson Sullivan, Baker Donelson, Caron, and Karr Tuttle (Dkt. ## 700-05, 707). In addition, the court GRANTS the Receiver's Final Motion (Dkt. # 710).

         The Receiver's counsel filed all of the foregoing motions on December 20, 2019, and properly noted them for the court's consideration on January 10, 2020. (See id.; see also Dkt. ## 700-05, 707.) Any opposition to the motions was due no later than Monday, January 6, 2020. See Local Rules W.D. Wash. LCR 7(d)(3) (“Any opposition papers shall be filed and served no later than the Monday before the noting date.”). No party filed an opposition to any of the motions. (See generally Dkt.) Under the court's local rules, the court may consider the lack of any opposition “as an admission that the motion has merit.” See Local Rules W.D. Wash. LCR 7(b)(2).

         The court finds that (1) the fees and costs requested in each of the fee applications listed above are reasonable and necessary, (2) the notice of the fee applications was appropriate, (3) the fee applications are made in accordance with the Order Appointing Receiver (see OAR (Dkt. # 88) ¶¶ 55-60), [11] and (4) the services provided were of substantial benefit to the Receivership Estate. (See Dkt. ## 700-05, 707.) Further, the court approves the requests in each application for the Receiver to pay the amounts previously held back from each applicant pursuant to the Order Appointing Receiver. (See id.; see also OAR ¶ 58 (“Quarterly Fee Applications may be subject to a holdback in the amount of 20% of the amount of fees and expenses for each application filed with the Court. The total amounts held back . . . will be paid out at the discretion of the Court as part of the final fee application at the close of the [R]eceivership.”).)

         Accordingly, the court GRANTS the fee applications (Dkt. ## 700-05, 707) and APPROVES the Receiver's payment of the following fees, expenses, and holdbacks to each applicant as listed below:

Applicant:

Fees:

Costs:

Holdback:

The Receiver

$1, 286.50

$884.20

$134, 840.06

Allen Matkins

$35, 810.10

$2, 045.83

$787, 295.79

Financial Forensics

$3, 972.00

$00.00

$53, 577.34

Peterson Sullivan

$15, 340.00

$00.00

$63, 854.77

Baker Donelson

$661.00

$00.00

$20, 978.17

Caron

$00.00

$00.00

$33, 948.29

Karr Tuttle

$3, 264.00

$00.00

$61, 008.92

         The court AUTHORIZES the Receiver to pay the following total amounts to each of the foregoing applicants as follows:

(1) $137, 010.76 to the Receiver;
(2) $825, 151.72 to Allen Matkins;
(3) $57, 549.34 to Financial Forensics;
(4) $79, 194.77 to Peterson ...

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