Free Appendix - District Court of Delaware - Delaware

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

In re:

) )

CHAPTER 11

SUMMITMETALS,INC.,
Debtor.

CASENO. 1:08-cv-0005 (SLR)

AMBROSE M. RICHARDSON, III

Appellant,
v.
U.S. TRUSTEE KELLY BEAUDIN STAPLETON,)

Appellee.

APPELLANT'S

APPENDIX

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INDEX

Notice of Appeal

Decision Order Bankruptcy 12/4/07 and of Court,

2

Temporary Restraining of Supreme OrderNY Court
Preliminary Decision Supreme Injunction ofNY Court Preliminary Order NY Injunction of Supreme Court Summary Judgment inGray Richardson Decision v.
Fee Decision in Gray v. Richardson

53
56 72 84
92
97

DecisionAppellate of DivisionGray Richardson in v.
Delaware Committee Adversary Complaint

Findings Conclusions and ofDelaware Court, Dist. 8/6/04

134

Fee Application Adam ofH. Prussin, Esq.
Fee Application ofCommittee Counsel
Time Records A.M.Richardson, - 12/31/98 of 6/1/95

178
209
295

Fee Application M.Richardson, - 12/31/00 ofA. 1/1/99

321

Fee Application M.Richardson, - 8/31/04 ofA. 1/1/01
Amended Supplemental and Application ofRichardson

421
490

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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRTCT OF DELAWARE

)

CHAPTER

11

In re:

)

SUMMIT METALS, INC.,
Debtor.

CASE 98-2870 NO. (KJC)

NOTICE

OF APPEAL

Ambrose Richardson,a creditor, appeals 28U.S.C. M. m, hereby under 8158(a) the ~om
Order theBankruptcy insofar it denied of Judge as appe~ant's adminis~ative entered claim in
this proceedingon the 4th day of December, 2007.

Thenames allparties theOrder of to appealed andthenames addresses their from, and of
respective attorneys, are set forth on the attached schedule.

AMBROSE M. RICHARDSON
Ambrose M. Richardson, III

Creditor of Chariot Group/Summit
40 Wall Street

New York, NY 10005

(212) 530-4771;Fax: (212) 267-2030
December 13, 2007

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1N THE

UNITED

STATES

BANKRUPTCY OF DEZIAWARE

COURT

FOR

THE DISTRTCT

Chapter ii
In re:

I -'

Case 98-2870-KJC No.
SUMMIT METALS, INC,
Debtor.

~I

ORDER
AND NOW, this of l)cccmbcr, 2007, upon consideration of Amended Applic~ition

I:i
--

ofhmbrose M. Richardson, nsq. for Compensation as Post-Petition Creditor and as Creditor Providing Substantial Benefit to the Estate Pursuant to ~~ 503(b)(i)(A)(i), 503(b)(3)~,(C).(D) and (F) and 503(b)(4)(Docket No. 587) CRichatdson Application"), objections thereto, after evidentiary hearing thereon and consistent with the foregoing Opinion, it is hereby ORDERED and DECREED that the Richardson Appliwtion is GRANTED, in part and DENIED, in part. Richardson is awarded an dlowed administrative expense in the amount of
52,533.65.

COURT:

Copies to:

48

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Joanne Bianco Wills, F~quire Klehr Hanisoxl Harvey Rn~~hurg & Ellets 919 N, Market S'Lreet,Suite 1000 Wilmington, 13~t~ 19801 Steven K. Kortanek, E~quire Kevin J. Mangan, Esquire Womblt Carlyle Sandrldge & Rice, PLLC 222 Delaware Avenue, Suite 1501 Wilmin~ton, DE 19801

Joseph Bodnar, J. Esquite
Wi~mington,DE 19802 Ad;dmG. landis, Esquire

law Offtces of~os~ph J. Bodnar
2101 North Harrison Street, Suite 101

~·!

4'i
$;
3

I

i

Rebecca Butcher, L. Esquire
Landis Rath $ Cobb, LLS

I :i
' . I :j

919 MarketStreet, Suite 600
Wilminbrton, DE 19801 "J" Jackson Shrum, Esquire

Harvey, Pennington Lid. 913 Market Street, 7" Floor
Wilmingrton, DE 19801

AmbIuse M. Richatdson, Esquire
A. M. Richardson, P.C.

40 Wall Street, 35" Floor
New York, NY 10005

Barry M. Klayman, Esquite
Todd Cherries Schiltz, Esquire

Wolf, Block, Schrnr & SolrsCohen I.I.P
Wiimingto~ Trust Center

1100 N. Market Street, Suite 1001 Wilmington, DE 19801
tL Adam Prussin, Esquire I ~·

Pomerantz Haudek Block Cirossnan gt Citess 100 Park Avenue, 26" I;Loor
New York, Ny i 0017-55 16

49

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IN THE

UNITED FOR THE

STATES DISTRICT

BANKRUPTCY OP DELAWARE

COURT

Chapter Il
Zn re: Case No. 98-2870-KJC

SUMMIT METALS, ING.,
Debtor.

OPINIO

N'

BY:

KEVIN J. CAREY, UNITED STATES BANKRUPTCY
INTRODUCTION

JUDGE

JEPSCO, Ltd. ("Jepsco~ and Ambrose M. Richardson, Esq. ("Richardson") have filed applications seeking the allowance of fees and expenses as administrative expenses pursuant to

section 503(b)of the BanlauptcyCode. ~he Chapter 11 Trustee,the United States Trustee,and
the Official Committee of Unsecured Creditors (the "Committee") (collectively, the "Objecting

Parties") have objected. The Court held evidentiary hearings on February 23, March 16, and April 4, 2006 and accepted~post-hearing briefs from the parties. For the reasons set forth below, the Court will deny Jepsco's request and grant in part and deny in part Richardson's request.
BACKGROUND

A.

The Summit Metals BankruDtcv and the Events Precedine.

A brief explanation of the events leading to and surrounding the filing of this chapter

This Opinion constitutes the findings of fact and conclusions of law required by FED.R BANI(R. 7052. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 99 1334 and 157(a). P. This is a core proceeding pursuant to 28 U.S.C. ~ 157(b)(l) and (bX2)(B).

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11 proceeding (the "Case")2 is helpful to the resolution of the instant dispute.
1. The New York Proceedinas

During the period from 1991 to 1995, Richard E. Gray, the sole director and majority

shareholder of The Chariot Group, Inc. ("Chariot") caused Chariot to pay approximately $7.7 million in fees to its indirect majority shareholder, Chariot Holdings Ltd. ("Chariot Holdings"), and to VDC Recovery Corporation, a Gray-controlled entity. During this time, Gray also caused' Chariot to write-off loans it had made to Chariot Holdines and to Gray. These events led to the August 1995 ~ling of a New York shareholder lawsuit against Gray (the "First NY Shareholder
Lawsuit"). After the commencement of the First NY Shareholder Lawsuit, Gray attempted to sell

Chariot's operating subsidiaries -- Energy Savings Products, Inc. ("ESP"), in which Chariot held
a 92% interest, and B.F. Rich Co., Inc. ("B.F. Rich"), ESP's wholly-owned subsidiary. Gray was

successful in June 1995, causing Chariot to sell its interest in ESP to Homestar Acquisition

Corporation ("Homestar Acquisition"), a company wholly owned by Gray. In exchange for ESP's stock, Gray arranged for Chariot to receive a $15 million note (the 'T\Tote")~om Hallowell Industries, inc. ("Hallowell"), another entity owned and controlled by Gray. Following the sale
of ESP to Homestar Acquisition, Gray merged Homestar Acquisition into ESP. The Note remains unpaid.

In August 1995, Gray merged Summit Metals, Inc. ("Summit" or the "Debtor") with

These background facts have been derived substantially ~somthen District Judge Jordan's Post-Trial Findings of Fact and Conclusions of Law resolving Summit Metals. Inc. v. Gray IIn re Summit Metals. Inc.), No. 00-387 (D. Del. Aug. 6, 2004), submitted as Exhibit 22. Judge Jordan has since been elevated to the Court of Appeals for the Third Circuit

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Chariot, transferred the remaining Chariot operations to Chariot Management, Inc., another entity af~iliated with Gray, and shut down Chariot operations. The events surrounding the Summit/Chariot merger led to the filing of a second shareholder lawsuit (the "Second NY
Shareholder Lawsuit" Lawsuits"). together, with the First NY Shareholder Lawsuit, the 'T\TYShareholder

In October 1996, the plaintiffs in the NY Shareholder Lawsuits successf~ully obtained preliminary injunctive relief with respect to the: (1) alleged looting of Chariot by Gray; (ii) sale of Chariot's interest in ESP to Homestar Acquisition; and (iii) merger of Chariot into Summit (the "Preliminary Injunction Proceeding"). As a result, Gray was enjoined ~om transferring any of ESP's assets to himself or any other entity that he owned or controlled (the "Preliminary Injunction"). In October 1998, Gray was found to have violated the Preliminary Injunction by misappropriating %4.3million from ESP and was held in civil contempt (the "Contempt Proceeding"). An order was entered in January 1999 providing Gray an opportunity to purge the judgement ofcotltempt by returning the $4.3 million. However, Gray refused to do so. He was
committed to prison fr~omNovember 2001 until November 2003, at which time he stipulated to

deposit the stock of the Debtor, ESP, Rivco las defined below), and Jenkins las de~fined below) intd escrow pending the resolution of the DE Adversary Proceeding las defined below).
2. The Delaware Proceedinns

On December 30, 1998, the Debtor commenced this Case, seeking protection under chapter 11 of the Bankruptcy Code. The filing of the petition stayed the NY Sliareholder
Lawsuits. The Committee was formed by the United States Trustee on March 4, 1999.

Richardson, the former partner of Gray and officer of Chariot and its subsidiaries, was appointed

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as its Chairman. On October 1, 2004, the Court appointed Francis A. Monaco, Jr. as the Chapter
11 Trustee.

On October 29, 1999, the Committee filed a complaint on behalf of the Debtor to recover property from Gray and his affiliated entities, including ESP (the 'aE Adversary Proceeding"). The Complaint alleged that Gray breached his fiduciary duties owed to the Debtor and Chariot by engaging in unfair and fraudulent self-dealing transactions, which included the looting of Chariot
~fitom1991 to 1995 and the sale of Chariot's interest in ESP for the unpaid Note. The Complaint

also alleged that, following the shut-down of Chariot's operations, Gray took two corporate opportunities of the Debtor when he acquired ownership in Riverside Millwork Co., Inc. ("Rivco") and Jenkins Manufacturing, Inc. ("Jenkkns") with the Debtor's money. On August 6, 2004, the District Court for the District ofl)elaware found for the Debtor, awarding a $40 millionjudgment against Gray and directing Gray and his affiliated entities to transfer their

interests Rivco Jenkins theDebtor. 2005, Debtor itsinterests Rivco in and to In the sold in and
Jenkins -- the estate's only marketable assets - for approximately $18 million.
3. Miscellaneous Relevant Proceedings

In 1997, creditors commenced an involuntary bankruptcy proceeding against Homestar

Lndustries,Inc. ("Homestar"), another entity owned by Gray, in the Eastern District of Misso~rri

(the "MO BankruptcyProceeding"). A chapter7 trustee was subsequently appointed,who

recovered approximately $600,000insurance in proceeds misappropriated from byGray
Homestar(the "MO AdversaryProceeding"). While in prison for contempt,Gray pled guiltyto bankruptcyand tax fraud relatingto the MO BankruptcyProceeding(the "MO Criminal Proceeding").Additionalunrelatedcriminalinvestigationsinto Gray's activitiesalso occurredin

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Connecticut

and New

York.

In 2000, while the DE AdversaryProceedingwas pending,creditorsof ESP commenced

an involuntary bankruptcy proceeding against in theMiddleDistrictof Tennessee "TN it (the Bankruptcy Proceeding"). Following commencement the TN Adversary the of Proceeding las
definedbelow), the CommitteedismissedESP as a defendant~om the DE Adversary

Proceeding. Committee fileda proofof claimon behalfof the Debtorin the TN The then Banlauptcy Proceeding. resolve To ESP'sobjection the Debtor'sproofof claim,the to Committee agreed relinquish Debtor'sclaimagainst in exchange 92%ofESP's to the ESP for
outstandingequitypost-bankruptcy any ofESP's rights or causes of action against Gray or and his affiliated entities,includingany Rivco and Jenkinscorporateopportunityclaims.
Tn2001, Richardson commenced a lawsuit in New Hampshire against Gray and his

affiliatedentities on the Debtor's behalf allegingclaimsidenticalto those alleged in the DE

Adversary Proceeding "NHProceeding"). NH Proceeding stayedshortly (the The was thereafter.
4. Proceedings Against Richardson

Fourseparate proceedings against filed Richardson relevant are here. Fi~t, priorto the filingof this Case,Grayand Summit Richardson NewYork,alleging Richardson sued in that
violated his fiduciaryduties as an officerof Chariot(the "RichardsonFiduciaryDuty

Proceeding"). Ultimately, Richardson the Fiduciary DutyProceeding dismissed was and
Summit was held responsibleto indemnifyRichardsonfor his fees and expenses.

In 1998,a portionof Richardson's andexpenses fees inculTed the Richardson in Fiduciary Proceeding reimbursed Summit.Ttwasthis reimbursement wasthe subject was by that of the secondproceeding against Richardson. May1999,following commencement this In the of

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Case, Debtor anadversary the filed proceeding against Richardson seeking avoidance the and
recovery the reimbursement an alleged of as preference "RRchardson (the Preference
Proceeding").

Thethird proceeding against Richardson commencedAugust bytheDebtor was in 1999 andalleged racketeering, conspiracy, tortious interference a contract economic with and relations, prima tort,abuse process, facie of breach fiduciary andvexatious of duty, litigation (the
"Richardson Racketeering Proceeding"). life spanof the Richardson The Racketeering
Proceeding was short as it was dismissed after ten days.

Thefourth final and proceeding against Richardson commenced ESPafterthe was by

filing theTNBan~uptcy of Proceeding. filed against Committee, ESP suit the Richardson, and
theirindividual lawyers lawfirms,alleging the DEAdversary and that Proceeding violatedthe automatic (the"TNAdversary stay Proceeding"). also sought ESP punitive damages ~om Richardson, arguing his failureto prosecute that certainobjections raisedin the TN he
BankruptcyProceedingamountedto egregiousconduct.
B. Procedural History

OnFebruary 2005,Jepscofiledits application "Application" "Jepsco Il, (the or

Application") seeking allowance feesandexpenses the of totaling $78,366.78 an as administrative expense under section oftheBankruptcy Jepsco 330 Code. subsequently amended Application "Amended its (the Application" Jepsco or Amended Application") on

April 2005 seek allowanceitsfees expenses section 26, to the of and under 503@)(3)CD) forits
"substantial contribution" the Case. TheObjecting to Partieshaveargued, interalia that: (i)

Jepsco standing section lacks under 503Cb)(3)(D); (ii)Jepsco notsubstantially did contribute to

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the Debtor's estate or creditors; and (iii) even if Jepsco substantially contributed, Jepsco is ineligible to seek its fees as an administrative expense.

On February15, 2005, Richardsonfiled his application(the "Application"or "Richardson Application")seekingthe allowanceof fees and expensestotaling $877,752.59as an administrativeexpenseunder sections 507(a)(l) and 503(b). Richardsonsubsequently amended fiis.Application "AmendedApplication"or "RichardsonAmendedApplication")on March (the

13,2006,reducing requestto $869,63 andrelyingonlyuponsections Cb)(l)(A),' his 1.50 503
503(b)(3)CB), @), and ~), and 503(b)(4). On April 3, 2006, Richardsonsupplemented(the (C), "Supplement")his AmendedApplicationwith more detailedinvoices and fUrtheramendedhis requestto remove section503(b)(3)(B)as a supportingprovision.4The ObjectingPartieshave
argued, inter alia that: (i) Richardson is unable to collect his expenses under section 503(b)(l)(A) because they did not arise ~-om a post-petition transaction with the Debtor or

providean actualbenefitto the Debtor's estate; (ii) Richardsoncannot collectexpensesunder section503Cb)(3)(C) becausethe criminalmatters in which he assisteddo not relate to the Case,
the Debtor' s business or its property; (iii) Richardson cannot recover his expenses under section

In his Amended Application, Richardson cites section 503@)(1)(A)(i).

Under the BankruptcyAbuse Preventionand ConsumerProtectionAct of 2005 C'BAPCPA"),section 503(b)(1)(A)was renumberedsection 503@)(1)(A)(i). Section507(a)(1)has also been renumberedas Section 507(a)(2). Becausethis Case was filed before the effectivedate ofBAPCPA, the Court will refer to the pertinent sectionsas they were designatedat the time the Case was filed.
4 It is unclear whether Richardson removed section 503(bX3)(F) as well. According to

Richardson's testimonyon April 4, 2006, he no longerwished to rely upon section503(b)(3)(F). (Hr'g Tr. 122:13-123:13, Apr. 4, 2006.) Moreover,the Supplementlumps his time spent on Committeematters into his section 503(b)(l)(A) claim. (Supplement5.) However,Richardson's Post-TrialBrief proffers a

section503(b)(3)(F) argument.CRichardson Post-Hr'gBr. 1'6-18.) Because this ambiguity of and
becausethe ObjectingParties have addressedsection 503(b)(3)~) in their papers,the Court will examine
whether the reimbursement of Richatdson's expenses under section 503(b)(3)Q is appropriate.

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503(b)(3)~) because his efforts failed to make a substantial contribution to the Debtor's estate

or creditors;(iv) by the plain languageof the statute,Richardsonis unable to recoverhis fees
under sections 5030>)(3)(C), @), and ~i); and finally, (v) Richardson cannot recover his fees under section 503(b)(4) because his status as an attorney does not entitle him to recover his professional rate, his efforts were duplicative, his fees are unreasonable, and his invoices are
vague and ambiguous.
DISCUSSION

In deciding whether to grant the relief sought in the Jepsco Amended Application, the Court is called upon to determine: (i) whether Jepsco is eligible to pursue an administrative

expense claim under section503(b)(3)~); (ii) if so, whether Jepsco substantiallycontributedto
the Debtor's chapter 11 case; and (iii) whether Jepsco can recover its fees under sections
503(b)(3)@) or 503(b)(4).

In deciding whether to grant the relief sought in the Richardson Amended Application, the Court is called upon to determine: (i) whether Richardson's expenses qualifjr for reimbursement under sections 503(b)(l)(A) and 503Cb)(3)(C),@) or 0; and (ii) whether Richardson's fees qualify for reimbursement under section 503(b)(4).
I. JeDsco Amended Application

A.

JeDsco eligibleto pursue administrativeallowanceof expenses but not fees is

In its AmendedApplication,Jepsco relies upon section 503(b)(3)@)to seek an
administrative expense recovery of$76,344 in fees and $2,022.78 in expenses. Under 11 U.S.C. ~ 503(b)(3)(D), the Court may allow as administrative expenses, the actual, necessary expenses, other than compensation and

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reimbursement specified in Csection503(b)(4)1, incurred by ... a creditor, an indentured trustee, an equity security holder, or a

committeerepresentingcreditorsor equity securityholders other than a committeeappointedunder section 1102of this title, in making a substantialcontributionin a case under chapter9 or Il of
this title ....

The ObjectingParties argue that Jepsco is ineligibleto recoverits fees and expenses

underthisprovision because(i) Jepscois not "a creditor, indentured an trustee,an equitysecurity holderor a committee representing creditors equitysecurity or holders[;l" (ii) section and
503Cb)(3)(D) not permit the recoveryof compensation. does

In defending eligibility its undersection503(b)(3)~),Jepscoargues the approximate that
$1 million claimheld in this Case by James T. Kelly ("Keely"), Jepsco's president,chief executiveofficer,sole director, and sole employee,qualifiesit as a creditorof the Debtor.

According Kelly,he usedJepscoas his alterego andoftenoperated to Jepscounderhis name.

(Hr'gTT. 37:20-38:1, 23,2006.)Essentially, Feb. Jepsco asserts Jepsco Kelly the that and are
same entity.

The Courtwill considerthe Jepsco AmendedApplicationunder section 503(b)(3)CD). The evidencesubmittedindicatesthat the totality of fees and expensesrequestedin the Jepsco

Amended Application generated were solelyby Kelly. At first,Kellydrafted Jepsco the

Application improperly without assistance counsel. and the of CHr'g 39:22-24, 23, Tr. Feb. 2006.)Thereafter, thehelpof counsel, with Kellysought adopt Application himself. to the for
The Court finds no reason to refUsesuch a request and will reach the merits of the Jepsco AmendedApplication.s

The Court will use "Kelly" and "Jepsco" interchangeably herein.

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Althoughthe Court concludesthat Kelly may adopt the Jepsco AmendedApplicationfor himself,Kelly is eligibleto pursue only an award of expenses-- not fees -- under section 503(b)(3)CD). plain languageof section 503(b)(3)CD) clear that an applicantwho The is substantiallycontributesto a debtor's estate and creditorsmay be awardedonly actual and necessaryexpenses. For an award of compensation,applicantsmust rely on section 503(b)(4),
which allows as an administrative expense, reasonable compensation for professional services rendered by an

attorneyor an accountantof an entitywhose expenseis allowable
under [section 503(b)(3)1, based on the time, the nature, the extent, and the value of such services, and the cost of comparable services
other than in a case under this title, and reimbursement for actual,

necessary expenses incurred by such attorney or accountant....

11U.S.C.g 503(b)(4) ~emphasis added).In the instantcase,the Objecting Partieshaveargued
that section503(b)(4)cannot apply becauseKellyis neither an accountantnor a lawyer. The Courtagrees. Kelly operatesand providesthe servicesof a "managementconsultingfirm."

CHr'g 36:8,Feb.23, 2006.) Therefore, Tr. because Kellycannotmeetthe standard eligibility for
under section503(b)(4),the Court must deny Jepsco's request for allowanceof $76,344in fees.

B.

JeDscodid not substantiallycontributeto the Debtor's estateor creditors

Under section 50~@)(3)(D), canrecover remaining Kelly his $2,022.j8 expenseshe in if
proves a preponderancetheevidence he incurred expenses a result activities by of that the as of
whichsubstantially contributed the Debtor'sestateor creditors.See.e.a.,In re Buckhead to Am. Corn..161B.R.11, 15 (Bankr. Del. 1993)~Becausecreditors presumed actprimarily D. are to
in their own interest and not for the benefit of the estate as a whole, they have the burden of

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proving thattheymade requisite ... the substantial contribution."). Bankruptcy does The Code
not define "substantialcontribution." However,courts have determinedthat an applicant's

activities substantially contribute they"'resultedin an actualanddemonstrable if benefit the to ,,,,1. .. l.~wYV,,,,.,,., debtor's estate and the creditors."' Lebron v Mechem Fin. Inc 27 F.3d937,944(3d Cir. 1994)

(quoting Haskins United CIn Lister~. F.2d 57(IOth 1988~. activities v. States re 846 55, Cir. The
must"facilitate progress thecase, in rather ... retard interrupt." re Gurlev, B.R than or In 235
626, 636 (Bankr. TN.D.Tenn. 1999).

Courts have examinedseveralfactorsto determinewhetherapplicants' efforts have

substantially contributed, including: "whether services provided benefit estate the were to the itselfor alloftheparties thebanl~nrptcy whether services in case; the conferreddirect a benefit

upon estate; whether the and services duplicativeservices were of performedothers." by Id.;
accordBuckhead, B.R at 15;In re FRG.Inc.. 124B.R.653,65803ankr. 161 E.D.Pa. 1991); In

re AlertHoldings 157 753,75703ankr. Inc., B.R. S.D.N.Y. 1993). Additionally, have courts
considered motivation the applicant, the of holding applicants act'Pf~m~y to serve that who

theirowninterests ... [who and would acted] have absent expectation reimbursement an of from theestate" cannot compensated section be under 503Cb)(3)~). Lebron, F.3dat 944(emphasis 27 added).If thebenefit received theestate incidental by was "arising activities applicant from the haspursued protecting orherowninterests[,l" in his courts found applicant's have an
contribution insubstantial. Id.

It isundisputed Kelly that participated voluntarily, onlyinthisCaseandtheDE not Adversary Proceeding, alsoin several themiscellaneous relevant but of yet proceedings. More

specifically, provided Kelly deposition testimonyaidtheDEAdversary to Proceeding, testified

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in this Caseto fightagainstconsolidation, reviewed assembled in anticipation the DE and files of
AdversaryProceeding,and attendedapproximately meetingswith the Committeein ten

preparation the DE Adversary for Proceeding. Moreover, KellymetwithESP's generalcounsel
to review businessrecords, met with BF Rich's attorneysand Rivco and Jenkinsshareholders to

discussmonetary demands fromGray,metwithU.S.Attorneys Missouri, in Connecticut, and
New York as well as the Federal Bureau of Investigation (the "FBI") and the internal Revenue

Service(the "IRS"), and testified at the ContemptProceedingand the TN Ban~uptcy
Proceeding's sale hearing. (Jepsco App. 6-8.)

Kellyassertsthat his effortssubstantially contributed this Casebecause:(i) his efforts to "prevented Grayfrompilfering moneyfromwhatultimately wouldbe partof the Summit estate, ~he] organized documents exhibits, helpedsendGraytojail so this [C]asecould and and proceed"(Jepsco Post-Hr'gPr. 5); (ii)the DEAdversary Proceeding, whichhe participated, in
"conferredsubstantiallyall, if not all, of the assets on the Debtor's estate" (JepscoPost-Hr'g Br.

5); and (iii)he "lessened burdenonthe [d]ebtors' the professionals expedited smooth and a
transitionthroughthe bankruptcyprocess" (JepscoPost-Hr'g Pr. 9 (alterationin original)
(citation omitted)).

TheObjecting Partiesdisagree Kelly' assessment his efforts'effecton the with s of

Debtor's estate creditors. theObjecting and First, Parties argue anycontribution that conferred uponthisCase merely was incidental, because Kelly's primary motive assisting parties in the was
to acquireRivcoand Jenkinsfromthe Committee. Second, Objecting the Partiescontend that Kelly'sassistance the TN Bankruptcy in Proceeding, various the criminal investigations, the Contempt Proceeding, the BF Rich,Jenkins Rivcomatters not relateto this Case and and did

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and, therefore, benefit conferred. no was Finally, Objecting assert success the the Parties the of
DEAdversary Proceeding resulted theCommittee's from efforts thatKelly's and testimony
could have been compelledthrough the FederalRules of Civil Procedure.

TheCourt agrees theObjecting andconcludes Kelly's with Parties that activities not did
make a substantialcontributionto this Case. First, the record fails to establishhow Kelly's

activities thecriminal in investigations, TNBankruptcy the Proceeding, theBFRichmatter-and
or evenhowthosemattersthemselves conferred directbenefiton the Debtor'sestateand -a

creditors. Kelly testified thecriminal that investigations totheindictment Gray led of in Rlissouri Connecticut, havereduced IRS'sclaim thisCase, placed IRSin and may the in and the

apositionseize to Gray's assets. Tr. (Hr'g 281:18-2&3:1, 2006.) also Apr. 4, Kelly testi~ed that
ESP, with subsidiary, Rich,'~were oftheumbrella Summit along its BF part of Metals" Tr. (Hr'g
41:13-15, 23,2006), Feb. thereby implying anycontributiontheTNBanlauptcy that to

Proceeding BFRich and matter con~ibutedthisCase. to However, isnoevidence there proving thatKelly's efforts theTNBankruptcy in Proceeding, BFRich the matter, thecriminal and investigations increased assets thisCase prevented ~omdiminishing. Inr~ the of or them See Granite Partners. 213B.R. 446~ankr.S.D~N.Y. ("mnsubstantial I~.P., 440, 1997) services
include thosethat do not actually increase sizeof the estate... .");Mardus the Monte;omerY

Wolfson Burten v.AM Cln AM Inc.), B.R. 904(D. 1996) & P.C. Int'l re Int'l. 203 898, Del.

~inding theapplicants that substantially contributed their because negotiations the allowed
creditors committee receive payment theirclaims). to 111 on Kelly's actions havehelped may

theTN Bankruptcy Proceeding bystopping flow money BF toGray helping the of from Rich and
theIRS pursue claims against butnone Kelly's Gray of actions been have proven have to

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increasedor maintainedthe assets of the Debtor. Kellyhimself admits this. ~

generally Kr'g

Tr. 253:1-300:2, 4, 2006.) Moreover, Apr. thereis no indication absentKelly'sefforts, that, a different outcome wouldhavebeenproduced this Case. See.e.a.,Lebron. F.3dat 946 in 27

(holding theapplicant's that contributions substantial were because were"critical" both they to
the courtandthetrustee); Granite, B.R at 449 ("Here, applicants' 213 the objections the to
disclosurestatementdid not alter the characterof the document,and did not, therefore,rise to the

levelof a substantial contribution."); re Columbia Svs..Inc..224B.R 540,552CBankr. In Gas D. Del. 1998)("Exxon's activities not of the typethatif absent,progress were towards
reorganizationof [the Debtor]wouldhave been substantiallydiminished.").

Second, although Kelly'srequestof andparticipation meetings the Jenkins in of and Rivcoshareholders havestopped may monetary payments Gray,whichultimately have to may
decreased Jenkins' and Rivco's sale value, the record shows that Kelly's motivation for

participatingthemeetings in stemmed hisminority from shareholder positions Rivco in and
Jenkins. (Hr'g Tr. 50:24-5 Feb.23,2006C'[B]oth 1:2, Ailward I weres~greholders and of JenkinsandRivco,andso wethoughit was a prettygoodideato findout whether notthese or companies beingdenuded Gray... .").) According Kelly,his primary were by to concern to was

prevent Rivco Jenkins "paying and ~om money thathadbeenprohibited a restraining out by order."(Hr'gTr.286:3-3, 4,2006.)Therefore, Apr. because requested participated Kelly and in
the meetings the purpose protecting for of RivcoandJenkins, benefitaccruing thisCaseas any to a resultof theseefforts merely was incidental.See.e.a.,Mfrs.Hanover TrustCo.v. Bartsh re IIn

Fli~ht Transn. Con>. Litier.), F.2d576,583(8thCir.1989) Sec. 874 (finding ofsubstantial lack
contributionwhere indenturetrustee's services,which includedmonitoringof and interventionin

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security banknrptcy and litigation, proofs claims, communicating advising filing of and and its
clients, were designed primarily to benefit its clients); In re Lister, 846 F.2d at 57 (denying

reimbursement the applicant' pre-petition for s efforts collecta judgment to whenhe "was

unaware thependency banknrptcy of of proceedings[,l" thus, and weresolely hisown for interest); Columbia 224B.R at 549(noting, a factor itsdecision withhold Gas, as in to
reimbursement, applicant's the "strongeconomic self-interest" the globalsettlement); in FRG,

124B.R.at 659Ololding potential that purchasers thedebtors' of assets notsubstantially did
contribute the estateby participating thebidding to in process because theiractions were
"primarily on behalf of their own interests").

Finally,although Contempt the Proceeding the DEAdversary and Proceeding

substantially contributed thisCasebyultimately to providing therecovery saleofthe for and
JenkinsandRivcostock,the CourtcannotfindthatKelly'stestimony fact-~nding and assistance

inthose proceedings substantially contributed. whileit is truethatKelly's participationthe in DEAdversary Proceeding extensive, was totaling approximately hours, eighty "extensive

participation case, ina without isinsufficient more, tocompel compensation." 235B.R. Gurlev,
at 636. Kelly reliesonInreEssential _TneraDeutics. 308B.R.170CBankr. Del.2004), Inc., D.

arguing hisextensive that participation "'lessened burden the[d]ebtors' the on professionals and
expeditedsmooth a transition through bankruptcy the process."' (Jepsco Post-Hr'g 9 Br.

(alterationoriginal) in (quoting Essential, B.R. 176).) 308 at Kelly's reliance Ess~ is on misplaced. Essential. applicants In the assisted estate taking a portion thedebtors' the by over of counsel's responsibilities. example, applicants keyplan For the drafted provisions, participated
in hearings, prepared and necessary corporate documents. Essential heldthat The Court

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"[w]ithout assisQnce, [d]ebtors' this the counsel wouldhavehadto devotesignificant and time resources perform to theseservices.... As a result,the Debtors wereableto cutcostsby focusing theireffortson theirareasof expertise allowing Capplicants]assistwhere and the to

appropriate ." Essential, B.R.at 176.Here, ... 308 unlike applicants Essential, the in Kelly's testimony fact-finding and assistance notrelieve Committee anyof itsduties enable did the of or
the Committee to focus its attention elsewhere. Essential is inapplicable here.

Thesuccess the Contempt of Proceeding the DE Adversary and Proceeding not result did solelyfromKelly' efforts, rather,fromthe participation many,including Objecting s but of the

Parties, plaintiffs theNYShareholder the of Lawsuits, theirrespective and attorneys.6 e.p., See.
In re WorldwideDirect. Inc., 334 B.R. 112, 125 (Bankr.D. Del. 2005) (concludingthat

applicant's participation a saledidnotsubstantially in contribute because was"noevidence there
what amountwas due solely (or even primarily)to [the applicant's] efforts .... [andthe

applicant] acl~nowledges it wasoneofmany that parties participatingthenegotiations"); in
Columbia 224B.R.at 549(noting, oneof the court'sreasonsfor denying Gas. as reimbursement,
that the settlement,which provided$550 to ~600millionin estate value, requiredthe
participation ofmany).

Finally, Courtis unwilling awardreimbursement the to undersection503(b)(3)CD) an for

applicant's andeffort testifying. Court time in The agrees thereasoning forth In~ with set in
Insupport Jepsco's of request, Richardson testified there that would have a DE not been
Adversary Proceeding without participation Kelly. CHr'g 252:1 the of Tr. 1-12, Apr.4, 2006.) As courts haveheld,"Corroborating testimony a disinterested by [emphasis added]partyattesting a claimant's to instrumental hasprovento be a decisive acts factorin awarding compensation activities to which

otherwise notconstitute'substantial might a contribution."' re U.S.Lines. 103 427,430 In Inc.. B.R. ~ankr.S.D.N.Y. 1989).TheCourt alsouseits"own may first-hand observance theservices of provided" addition anycorroborating in to testimony finda substantial to con~ibution. Id.

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Gherman. 105 B.R. 714, 717 ~ankr. S.D. Fla. 1989): "Virtually all litigation is dependent to some degree upon the testimony and, therefore, the time and effort, of lay witnesses. A witness subject to a court's subpoena power, who voluntarily furnishes evidence, is simply performing a civic duty." Reimbursing a lay witness who provides testimony for the prevailing party would
encourage lay witnesses to demand reimbursement from a debtor regardless of the substance or

significance thetestimony, of thereby adding unwelcome an incentive theprocess. to
Therefore, because the Court has determined that Kelly's efforts throughout the TN
Bankruptcy Proceeding, the BF Rich, Rivco, and Jenkins matters, the various criminal

investigations, the DE Adversary Proceeding, and the Contempt Proceeding did not substantially contribute to this Case, Jepsco's request for an allowance of $2,022.78 in administrative
expenses will be denied.

C.

Jepsco failed to meet its burden ofDroving· that its expenses are actual and
necessary

Even if this Court concludes that Kelly's efforts substantially contributed to the Debtor's
estate and creditors, the Court cannot award Kelly his expenses because he has failed to meet his burden of proving that they are actual and necessary. Under section 503(b)(3)@), a finding of

substantial contribution is only the first step. After such a finding, the Court must determine whether an applicant's expenses were actual and necessary. The applicant must provide

suf~cient details of each expense incurred for which reimbursement is sought. See generally In re Jensen-Farlev Pictures. Inc., 47 B.R. 557, 584 (Bankr. D. Utah 1985) (noting that required details include the date, type, and amount of each expense). Local Rule 2016-2 provides

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guidance applicants.It requires an applicant to that requesting payment an administrative of expense undersection503(b)(3) mustprovide Courtwith"an expense the summary category by

fortheentire period therequest. of Examples suchcategories computer-assisted of are legal research, photocopying, outgoing facsimile transmissions, meals lodging." airfare, and Del.
Banl~.L.R.2016-2(e).Additionally, expense each withineachcategory be itemized, must with "the datethe expense incurred, chargeandthe individual was the incurring expense, the if
available." Id.

Znthe JepscoApplication, whichprovides onlyexpense the detailsubmitted the Court, to

Kelly's activities February untilFebruary arelisted some ~om 2001 2004 with detail, his but expenses merely are totaled listed and under activity. example, each For Kelly's submission for
February 2001states: "Meeting Counsel's in officeregarding transferof records ~
Expense: $32."

(Jepsco 6.) TheApplication notprovide explanation theexpenses App. does any of except for theJanuary expense 2004 described "hotel nights latecheck as 2 and out." (Jepsco 8.) App.
.Moreover, testimony bothRichardson Kellyprovides additional the of and no insight.

Consequently, without supporting theCourt unable award any detail, is to Kelly's requested expenses. e.g.,Jensen-Farlev,B.R.at 584C'Undocumented See. 47 expenses notbe will allowed."); Worldwide Direct, B.R.at 120(holding "a request anadministrative 334 that for
claimundersection503(b)requires samelevelof documentation substantiation a the and as

request compensation section for under 330"); reF.A. &Co.. 114 92,94-95 In Potts Inc.. B.R. (Bankr. Pa 1990) E.D. (denying reimbursement the of"administrative fortheapplicant's costs"
failure to specify its components).

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II.

Richardson Amended ADDlication
A. Section 503Cb)(l)(A)

Richardson relies upon section 503Cb)(l)(A) to seek an administrative expense recovery

of $618,995.877 feesand $82,358.20 expenses.Partof Richardson's in in claimis comprised of the Richardson Fiduciary DutyProceeding indemni~cation awardandhis subsequent collection
costs. The collectioncosts include Richardson'sfees and expensesincurredfor effortsin this Case, the DE AdversaryProceeding,the MO BankruptcyProceeding,the MO Adversary Proceeding,the MO CriminalProceeding,the TN BanEouptcy Proceeding,the ?TN Adversary

Proceeding, NHProceeding, Richardson the the Preference Proceeding, Richardson the Racketeering Proceeding, Contempt the Proceeding, the Preliminary and Injunction Proceeding,
taken to recover assets for the estate so that he could collect his indemnification award (the

"CollectionCosts"). Accordingto Richardson,he is entitledto an awardof the CollectionCosts
because of Chariot's corporate by-laws, providing indemnification "to the fullest extent now or

hereafter permitted law"Oiichardson by Post-Hr'g 3), andthe Delaware Pr. Supreme Court's
decisionin StifelFinancialCorn. V.Cochran,809 A.2d 555 CDel. 2002),permittingthe

indemnification expenses of incurred a corporate by officerin successfUlly prosecuting an
indemnificationsuit under 8 Del. C. ~ 145(a)8 ~ichardson Post-Hr'g Pr. 3-4). 7 Ofthe $618,995.87 requested undersection503(b)(l)(A), 1,3 $56 80.81is alsosought
Richardsonalso relies upon In re WomenFirst Healthcare.Inc.. 332 B.R. 115 (Bankr. D.

under sections 503(b)(3)~D) and 503(b)(4).

Del.2005),andReading v. Brown,391U.S.471(1986), arguethathe mayrecover Co. to his
indemnification claim under section 503(b)(l)(A) without a showingof substantialcontributionbecause his claim was incurredwhile defendingan action broughtby the Debtor,as successorin interestto

Chariot. (Richardson Post-Hr'g 5-6.)Those Br. cases stand theproposition a tortcommitted for that by
a debtorcangiveriseto an administrative claim. In the instantcase,Richardson's reliance Women on
First and Readingis misplacedas he has not accusedthe Debtor of committinga tort

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In response Richardson's to request, Objecting the Partiesarguethat an indemnification awardof Collection Costsis improper because:(i) Richardson failedto introduce evidence into the Chariot bylaws; the Stifeldecision (ii) doesnot entitleRichardson receive to indemnification for the Collection Costs;and(iii)the Collection Costsareunreasonable. Additionally, if even
the Court awardsRichardsonthe CollectionCosts,the ObjectingParties assertthat Richardson' s entire indemnification claimunder section 503(b)(l)(A) is improperbecauseit did not arise out

of a post-petition transaction between Debtorandbecause the Richardson'actions not s did
directly and substantially benefit the estate.

It is unnecessary the Courtto decidewhether for Richardson entitled an awardof his is to
Collection Costs. Even if the Court awarded them, Richardson's indemnification claim is not entitled to administrative status. Under 11 U.S.C. g 503(b)(1)(A), the Court may allow as

administrative expenses, actual,necessary "the costsandexpenses preserving estate, of the including wages, salaries, commissions services for rendered the commencement the after of case." Fora request be allowed to undersection503Cb)(1)(A), applicant the mustprovethat

"'thedebt[arises] a transaction thedebtor-in-possession from with ... [and] consideration the supporting claimant's topayment beneficial thedebtor-in-possession the right [is] to inthe operation thebusiness."' of CalDme v. O'Brien Com. Envtl. Energy. CIi~ O'Brien Inc. re Envtl. Energy. 181 527,532-33 Cir.1999) Inc.), F.3d (3d (quoting Cramer Mammoth Inc.CIn v. Mart. re Mammoth Inc.). F.2d950,954(Ist Cir.1976) alterations original)); Mart. 536 (first in accord InreWomen Healthcare. 332B.R.115,121(Bankr. Del.2005);Inre Pinnacle First Inc., D.
Brands. 259R.R.46, 51 (Bankr. Del.2001);In re Mid-American Inc., D. WasteSvs..Inc.,228 B.R. 816,821~Bankr. Del. 1999); re Phila.Mortgage D. In Trust,117B.R 820,827(Bankr.

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E.D. Pa. 1990).

In this Case, Richardson's section 503(b)(1)(A) indemnification claim fails because it did not arise from a transaction with the Debtor. Rather, it arose from the Richardson Fiduciary Duty Proceeding, which was filed pre-petition and stemmed ~fi·om Richardson's pre-petition conduct as an officer of Chariot. Consistently, courts have held that an indemnification claim based upon pre-petition services or conduct is not a cost or expense for "services rendered after the
commencement ofa case." 11 U.S.C. ~ 503Cb)(1)(A). Instead, it is a form ofprepetition

compensation for services that is not entitled to administrative expense priority. See. e.a.,
Pinnacle, 259 B.R at 51-52 (denying Rrlministrative status to applicant's indemnifrcation claim

arising ~-om a contract executed pre-petition); Mid-American, 228 B.R at 821-22 (Iefusing to
award administrative expense status for indemnification claims arising ~om securities Litigation,

which arose pre-petition out of the applicants' pre-petition conduct); In re Overland Park Fin. Corn., 240 B.R. 402, 405-06 (Banlr= D. Kan. 1999) (refusing to grant administrative expense
priority to former officer/director's indemnification claim for expenses incurred in a lawsuit

based upon his pre-petition actions); Houbip;ant, Inc. v. ACE Mercantile. Inc. IIn re Houbinant. Inc.). 188 B.R 347, 359 (Bankr. S.D.N.Y. 1995) Ololding that because the agreement at issue

was executed pre-petition,contractual toindemnification therefirom bea any right arising would
pre-petition unsecured claim); In re Hi~bland Group. Inc.. 136 B.R. 475, 481 ~ankr. N.D. Ohio

1992) (same); Phila Mortgane, 117 B.R. at 828-30 (finding that claims based upon pre-petition conduct cannot be afforded administrative expense priority because claims must arise postpetition); In re Amfesco Indus.. Inc., 81 B.R. 777, 784 ~ankr. E.D.N.Y. 1988) (same); cf. In re

Heck's Props., Inc., 151 B.R. 739, 767-68 (S.D. W. Va. 1992) (awarding administrative cost

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priorityofficers' directors' to and indemnification that ~om lawsuit upon claims arose a based
their post-petitionconductand services).

Theremainder ofRichardSon's section 503@)(1)(A) is comprised histimeand claim of

expenses onCommittee According spent matters. toRichardson, and his time expenses devoted
to Committee --andalso collecting indemnification --areentitled priority matters to his award to
under section 503(b)(l)(A) because efforts his enabled recovery assets theestate. the of for

(Supplement "One themain 5-6.) of policies underlying 503Cb)(l)(A) section istoprovide an
incentive creditors others continue commence business aninsolvent for and to or doing with

entity."COLLIER 4 ON BANKRUPTCY (Alan Resnickal.eds., ed, f[503.06[23 N. et 15th rev.

2006); also see Mammoth 536 at954 abusiness bereorganized, Mart. F.2d ("mf isto third
parties bewillingprovide necessary and must to the goods senices. they Since clearly not will
dosounless claims payment bepaid their for will ahead thepre-petition andliabilities of debts

ofthedebtor, Code] [the provides apriority expenses for incurredthedebtor-in-possession by in
order maintain, to preserve, rehabilitate ban~krupt or the estate.'?. a section Thus, 503(b)(l)(A)

applicant demonstrate costs fees whichseeks must that "the and for it payment an provided
actual benefit theestate thatsuch andexpenses necessarypreserve value to and costs were to the oftheestate assets." O'Brien Envti., F.3d 533 181 at (citations omitted) (emphasis added).

Examples and ofcosts expenses awarded under 503~b)(l)(A) often priority section are "outlays for repairs, freight, insuringvalue the upkeep, [and] the of property [as as] storage .... well for
ofproperty,rent forother and for and goods services incidental toprotecting, conserving. maintainingrehabilitating ... ." 4 COLLIER and theestate ON BANKRUPTcY atTI 503.0611]. In theinstant although case, Richardson extensivelyheconferredactual argues that an benefit the to

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estate,he failedto establish his costsandexpenses that werenecessary preserve valueof to the
estate assets. Therefore,Richardsonhas failed to meet the burdenrequiredunder section

503(b)(l)(A). Richardson's request anadministrative for expense priority claim under section
503(b)(l)(A) will be denied.
B. Section 5031b)(4)

Richardson reimbursementfeestotaling seeks of $711,326.65 section under 503Co)(4).9
As set forthabove, section503(b)(4) allowsforthe reimbursement of"reasonable compensation

forprofessional services rendered anattorney anaccountant anentity by or of whose expenses is allowable [section under 503(b)(3)1 ." Asindicated theplainlanguage thestatute, ... by of the
issue of whether fees can be awarded as administrative expenses under section 503Cb)(4)

typically notdecided after Court is until the allows administrative an expense recovery under section 503Cb)(3). Nevertheless, Court address the will section 503Cb)(4) butconcludes first, that
Richardson's request must be denied.

Richardson, attorney an admitted practice the stateof NewYork,has submitted to in his

feerequest under section 503(b)(4) seeks and reimbursement andhisemployees' ofhis legal
servicesin the NY ShareholderLawsuits,the ContemptProceeding,the PreliminaryInjunction

Proceeding, Case, DEAdversary this the Proceeding, MOBankruptcy the Proceeding, MO the Adversary Proceeding, MOCriminal the Proceeding, TNBankruptcy the Proceeding, TN the
9 Richardson requests reimbursement his feesundersections @)(1)(A), of 503

503@)(3)(C),and and503(b)(4). (D), (F), However, reimbursement can awarded under offees be only
sections 5030b)(1)(A) 503Cb)(4). 11U.S.C.~ 503@)(3) and See ("[T]here shallbe allowed as administrative expenses the actualandnecessary ... expenses, otherthancompensation and

reimbursement Asexplained Discussion Part1I.A., ...."). in suwa Richardson's request feesunder for
section503(b)(l)(A) denied.Theremainder his requested willbe analyzed is of fees undersection
503@)(4).

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Adversary Proceeding, NHProceeding,Richardson the the Fiduciary Proceeding, Duty the
Richardson Preference Proceeding, theRichardson and Racketeering Proceeding. Services included drafting, reviewing filing and pleadings, undertaking discovery, providing advice,

performing research, developing and legaltheories. (Richardson Post-Hr'g 16.) Pr.
Richardson's hasbeenbilledat the rateof $250-275 hour,his associate's time per time at $150

perhour, hisparalegal's at $75perhour.(Richardson App.8.) and time Am.

TheObjecting have Parties argued Richardson notemployedanattorney that was as for anyparty therefore,seeking and, is improperlyhourly forservices provided an wage he while representing himself. support thisargument, Objecting rely Inr~m~n~S~I~ In of the Parties on
Nos.04-3216, 00-11773F, WL2713059 Pa Nov.23,2004), Inre Pa~as, 277 2004 (E.D. and B.R.171(Bankr. E.D.N.Y. 2002), ofwhich helpful theCourt' present both are to s inquiry. In Gimelson Papoas, and attorneys sought reimbursementtheirtimedevoted of to

assisting trustees therecoveryassets. courts in of Both denied requests. ~E~S.Court the The
reasoned:"Themerefactthatthe creditor happens be an attorney bills$250perhour to who

does change inqujr. Section provides 'actual' not the 503(b) that 'expenses' beafforded may administrative status. expense Marshall's billable although time, valuable, notan'actual was

expense'Marshall:" B.R. 177. Gimelson agreed theBankruptcy to 277 at The Court with Court,
whichheld,"Section 5030>)(4) not include timespentby a creditor represents does the who himselfandhas not incurred attorney's but affordsan administrative any fees, priority to

reimbursecreditor compensation forprofessional a for paid services provided anattorney by for
an entity." 2004 -C~L 2713059,at *22.

TheCourt agrees thereasoningPat~oas Gimelson. fact Richardson with of and The that is

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an attorneydoes not changethe relevantinquiryof eligibilityunder section503(b)(4). Only "an attorneyor an accountantof an entity whose expenseis allowableunder ~section 503(b)(3)1" is eligiblefor reimbursementof the "actual and necessaryexpensesincurredby such an attorneyor accountant... ." 11 U.S.C. ~ 503Cb)(4) (emphasisadded). Here, althoughRichatdson's actions may have been motivated, at least in part, by the prospectof helping other case participants, Richardsonwas not employedas an attorneyfor those participantsand thus, could have been actingonly in his personal capacity. Therefore,becauseRichardson,"as an attorneyrepresenting himself,does not seek reimbursementof professionalfees that he incurred,but seeks compensation his own time expended[,l"Richardsonis ineligibleto seek reimbursement for of his fees under section 503(b)(4). Gimelson,2004 WL 2713059,at *21. Richardson'srequest for
reimbursement of $711,326.65 in fe~s under section 503(b)(4) is denied. C. Section 503ro)(3)(C)

Richardsonnext arguesthat he is entitledto an administrativeexpenserecoveryof $1,830.59under section 503Cb)(3)(C)'O his expenses" incurredwhile assistingstate and for
federal officials in developing and prosecuting bankruptcy and tax fraud claims against Gray. More specifically, Richardson· asserts that he worked with the FBI and U.S. Attorneys

prosecutingthe MO CriminalProceedingby answeringquestions,establishingthe falsityof Gray's statementsunder oath at the MO BankruptcyProceedmg'smeetingof creditors, identifyingsupportingevidence,and providing"extensivebackgroundinformation... relating to

'O

Of the $1,830.59requestedunder section 503(b)(3)(C),$1,X27.59 also sought under is

section 503@)(3)(D). " The Court will not address Richardson's fee request under this section for the reasons stated above. See Discussion suDra Part II.B.

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the Yolk New proceedings overall picture." and the big ~iichardson 27.) Am. App. The Obj Parties that MO ecting argue the Criminal Proceeding relatethe does not to Debtor's case, business, orproperty but stems Gray' rather, from smisappropriation sinsurance ofHomester'

proceedings testimonyMO and false inthe Bankruptcy smeeting Proceeding' ofcreditors.
The cannot Richardson's under Court allow request section 503(b)(3)(C). 11 Under

U.S.C. ~503(b)(3)(C), may asadministrative "the necessary the Court allow expenses,actual,

expenses,than other compensation and reimbursementunder 503Cb)(411, specified [section incurred acreditor by ... inconnection prosecution offense tothe with the of criminal relating a
case tothe or business orproperty debtor ." Unlike 503 ofthe ... sections@)(1)(A) and

503~(3)(B) section and (D), 503Cb)(3)(C) does requirethe not that expenses by incurred the creditor abenefit estate. provide tothe However, the applicantthe ofsatisfying bears burden a

two-prong the test. applicant adirect between sought Firsf must show relationship expenses the
and prosecution the of criminalactivity. 27 at943 @olding the See Lebron. F.3d n.l that section 503(b)(3)(C) was unavailable toan applicant his although leading because efforts, ultimately toa criminal prosecution were incurred course criminal of debtor; not the inthe of a proceeding); In

re 291 582, ~ankr.Me. (refusing under 503(b)(3)(C) Petit, B.R. 591 D. 2003) an award section
because was showingthe there no that applicant' incurred sexpenses inproviding information to the which tothe court, led investigation and prosecutiondebtor, incurred ofthe were in connection criminal with a investigation). the Second,applicant prove the must that prosecution ofthe criminal relates debtor's business, offense toa case, orproperty. inreHolder S~e~g~,
207 574, ~3ankr. Tenn. @rosecuting for im~roper B.R. 576 M.D. 1997) the debtor the representations and omissions statementsschedules). on his and

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Inthe case, instant Richardson his fulfilled burden the prong did do under first but not so

under second. record the The establishes that Richardson's were inconnection expensesincurred

with prosecution Criminal Richardson' assisted the of MO Proceeding. sactivities the the FBI
and Attorneys U.S. informulating and an indictment provided against See evidence Gray. ~ Fall, B.R. 1012 D. 1988) phrase'in 93 1003, ~Banlcr. Or. ~The connection'encompass could a

wide of variety activities. suggests intent acreditor activities Its use alegislative that whose can
beshown cont~ibuteddirect tothe tohave inany way results led prosecution which to ofa criminal ... .")· offense However, isunclear the Criminal the record how MO Proceeding --or

even MO howthe Bankruptcy or MO Proceeding Adversary --relates the Proceeding tothis Case, Debtor' or business. isno the sproperty its There evidence Debtoran that the had interest
intbe insurance misappropriated that had interest MO proceeds by or it any Gray inthe

Bankruptcy Moreover,no Proceeding. there evidence how Debtor's is establishing the business
related MO tothe Criminal Proceeding ortoHomester. Richardson that Homestar argues the

trustee have aclaim but not of successful of may asserted to Jenkins because did the outcome the MO Adversary ~'g Tr. Proceeding. 30:15-25, 2006.) argument Mar. 16, This isunpersuasive in of lackevidence such Because has to lightthe of supporting aclaim. Richardson meet failed his of this must his for administrative section burden proof,Court deny request an expense under
503(b)(3)(C).

D.

Section503~b)(3)~D)

TumingtoRichardson's argument, must whether next most lengthy the Court decide Richardson'sfor administrative request an expense of$107~82.41 under recovery inexpenses

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section 503(b)(3)(D) isproper.'2 Richardson setforth has eighteen specific exampleshow of his
effortsin thirteen different proceedings substantially contributed this estateandits creditors. to

TheObjecting Pasties contend anaward that under section 503Cb)(3)@) is inappropriate because:

(1) Richardson's provided actual direct efforts no and benefit theCase; ifa contribution to iii)
wasmade,it wasthe resultof numerous retained professionals; Richardson'primary (iii) s

motivation acting to benefit in was himself to fulfill frduciary owed Committee or the duties to members; (iv)many Richardson's and of efforts duplicative retained were of professionalsthe in Case.Below, Court the addresses separately Richardson's efforts eachoneofthethirteen in

proceedings determines anallowed and that administrative totaling expense $2,533.65 is
appropriate.
i. NY Shareholder Lawsuits

According Richardson, participationtheNYShareholder to his in Lawsuits, more specifically, efforts his regarding Preliminary the Injunction Proceeding Contempt and

Proceeding, substantially contributed Debtor's andcreditors "establishlingl tothe estate by the
factsandtheories the Debtor'slootingand~audulent of transferclaims"(Richardson Post-Hr'g

Br.8)asserted theDEAdversary in Proceeding byultimately and causing Gray's incarceration,
whichledto the escrow JenkinsandRivcostockandprevented of furtheractions adverse the to

Debtor (Richardson Post-Hr'g 8). Additionally, Br. Richardson argued hisefforts the has that in Preliminary Injunction Proceeding provided evidence theDEAdversary for Proceeding. More

'2

Ofthe$107,282.41 requested section under 503(b)(3)~D), $81,816.65alsosought is

under section 503(b)(1)(A)$1,827.59 section and under 503(b)(3)(C),these but expenses disallowed are
forthereasons discussed previously. Court notaddress The will Richardson's request fee under 8 503(b)(3)CD)thereasons for stated above.SeeDiscussion PartII.B. sunra

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specifically, Richardson gathered evidence, recruited witnesses, pleadings, drafted and
supervised attorneys. Tr.23:4-7, 16,2006.)With (Hr'g Mar. respect theContempt to

Proceeding, Richardson tounseal record theContempt worked the of Proceeding, prevented its resealing, discovered evaluated and evidence, worked H.Adam and with Prussin ("Prussin"), the
attorney theNYShareholder for Lawsuit plaintiffs special and counsel theCommittee. to
~ichardsonPost-Hr'g 8; Hr'g Tr. 24:4-22, Pr. Mar. 16,2006.) In this Case,thePreliminary Injunction Proceeding the Contempt and Proceeding

substantially contributed estate. tothe Those proceedings established andtheories facts asserted
intheDEAdversary Proceeding, thereby and "lessened burden theDebtorC's] the on

professionals[,l" fees expenses, eased professionals' reduced and and the preparation. Es~e~,
308B.R.at 176.Moreover, proceedings to theescrow Rivco Jenkins the led of and stock, ensuring preservation theDebtor's its for estate itscreditors. and However, Court the cannot
conclude it wasRichardson's that effortswhichdirectly caused thesebenefits.'3 benefits The

produced thePreliminary 6rom Injunction Proceeding theContempt and Proceeding resulted ~omtheparticipation ofmany, especially Prussin. ~ichardson App. C'Richardson Am. 19 ...
workedwithH. AdamPrussin discredit to Gray'sarguments not owning affiliates of his and

having purged contempt."); Tr.43:4-7, 16, Cmnconnection the his Hr'g hiar. 2006 with

contempt proceedingeven respect theadversary and with to proceeding, it IRichardson's effort]
wassupportive Prussin was... thebarrister thiscase .").)Richardson of~lr. who in ... claims

'3

Some of Richardson's efforts occurred pre-petition. Pre-petitionexpenses are

recoverable section under 503(b)(3)@) iftheapplicant "establish thepre-petition only can that efforts resulted a substantial in contributiontheestate to post-petition." Essential. B~R. 175(emphasis 308 at
added).

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tohave"supplied evidence show ... Clayhadsufficient the to that resources purge to the contempt" (Richardson App.19),"established factsandtheories theDebtor's Am. the of looting
and~i·audulent transferclaimsagainst Gray"CRichardson App.5),andbeen"substantially Am.

responsible Cthe] for injunction" Tr.23:7, ~-Fr'g Mar.16,2006).Without additional any evidence support assertions theCourt's to such or first-hand observance Richardson's in of role

the Contempt Proceeding Preliminary Proceeding, cannot and the Injunction the Court conclude
thathis effortssubstantially contributed the Case. See.e.a.,In re 9085E. MineralOffice to

Bldn.. 119B.R.246,249-50 Ltd., (Bankr. Cole.1990) D. ("Something thanmere more conclusory self-serving statements regarding involvementa casewhich one's in allegedly
resulted in a 'substantial contribution'must be presentedto the Courtbefore compensationcan

be allowed.... '[A] court's ownfirst-hand observance the services of provided be a may sufficient basis... ."' (quoting re U.S.Lines.Inc.. 103B.R.427,430(Bankr. In S.D.N.Y.
1989)).

Moreover,the Court cannot agreethat Richardson's effortsto unsealthe Contempt

Proceeding's record directly bene~tted estate creditors. 1999, this and In Richardson's efforts

permitted access thecourt and records. Richardson public to file the ~ Post-Hr'g Ex.A(J. Br.
CozierOrderdatedDec.9, 1999).)However, effortwas duplicated the Committee. this by The

parties involved theNYShareholder with Lawsuits entered a Stipulation Protective into and
Order, which forbade fi·om thematerials them using produced connection those in with

proceedings inadditional litigation. 24(StipulationProtective dated i, 1997).) (Ex. ~t Order July
In2001, Committee the fought successfullyobtain usetheconfidential to and materials theDE in

Adversary Proceeding. 516 (Ex. CHr'g Oct. 2002).) Tr., 21, Richardson failed produce has to

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anyevidence exceptfor conclusory statements indioate the recordhe worked unseal to that to
includedmaterialsnot aheady includedin those obtainedby the Committee. (See Richardson Post-Hr'g Br. 11). Moreover,even though the ContemptProceedings'evidentiaryrecord may have been unsealed,the Court is unclear whetherthe parties to the DE AdversaryProceeding could have used them without first seekingadditionalcourt approval. (See Ex. 24 f(7 ("Any
Confidential Material which is admitted into evidence shall not lose its protection under this

Stipulationand ProtectiveOrder unless orderedby the Court~").)As such, the Court must concludethat it was the Committee's efforts,not Richardson's efforts,which directlybenefitted
the estate and its creditors.

2.

MOBanlauDtcv Proceedinp.'MO Adversary Proceeding. Criminal MO
Proceeding (collectivelv. the "MO Proceedings")

In the MO BankruptcyProceeding,Richardsonexchangedinformationwith the chapter7

trustee,evaluated evidence, identified and instances Gray'sfalsetestimony the meeting of at of
creditors. These efforts, accordingto Richardson,led to the successof the MO Adversary

Proceeding, whichrecovered $600,000 theHomestar for estate,andthe MO Criminal Proceeding, whichledto Gray' guiltypleaof bankruptcy tax ~aud. CRichardson App. s and Am. 26-27.)According Richardson, success the MOAdversary to the of Proceeding stopped the chapter7 trustee~om asserting claimto Jenkins.(Hr'gTr. 30:15-20, a Mar.16,2006.) Also, Richardson argues Gray'sguiltypleadiscredited in the DE Adversary that Gray Proceeding.
CHr'g Tr. 30:24-25, Mar. 16, 2006.) The Court cannot conclude that Richardson's efforts in the MO Proceedings substantially contributed to the Debtor's estate and creditors. For the Court to find a substantial contribution,

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"the applicant mustshowa 'causalconnection' between service the contribution." the and Granite. B.R.at 447 (citation 213 omitted).Here,no suchconnection beenshown.First,as has the Courtpreviously indicated, is unclear the MOProceedings it how provided directbenefit a to
the estate and its creditors. See DiscussionsuDraPart II.C. Second,even if the Court found a

directbenefit, is unclearhowRichardson' it effortssubstantially contributed. Therehas beenno evidence submitted indicate the chapter7 trusteein theMOBanl~zlptcy to that Proceeding a