Opinion

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

In re:

John Frederick Shastal, Jr. Case No. 20-31468-jda

Kimberly Ann Shastal, Chapter 7

Hon. Joel D. Applebaum

Debtors.

___________________________/

SAMUEL D. SWEET, Chapter 7

Trustee for the Estate of Debtors,

John Frederick Shastal Jr. and

Kimberly Ann Shastal, and

JOHN FREDERICK SHASTAL,

an individual, and KIMBERLY

ANN SHASTAL, an individual,

Plaintiffs,

v. Adv. No. 24-3033

MAJORS LAW, PLLC,

a Professional Limited Liability

Company, SHEENA L. MAJORS,

an individual, DESIRAE BEDFORD,

an individual and RECOVERY LAW GROUP,

a Professional Corporation,

Defendants.

___________________________/

ANDREW R. VARA, United States Trustee,

Plaintiff,

v. Adv. No. 24-3076

RECOVERY LAW GROUP, APC and

SHEENA MAJORS,

Defendants.

____________________________/

OPINION AWARDING DAMAGES TO PLAINTIFFS AND AGAINST

RECOVERY LAW GROUP PURSUANT TO 11 U.S.C. § 526(c)(2)

INTRODUCTION

On September 17, 2025, this Court issued its Opinion Granting Motion for

Partial Summary Judgment With Respect to 11 U.S.C. § 526 Filed by John and

Kimberly Shastal and the Chapter 7 Trustee (the “September 17th Opinion,” Dkt. No.

204) and corresponding Order (the “September 17th Order,” Dkt. No. 205). In its

September 17th Opinion, the Court determined that Recovery Law Group was liable

to the Shastals for Recovery Law Group’s violations of 11 U.S.C. §§ 526(a)(1) and

(2) (failing to perform promised services and for making untrue or misleading

statements). As a result of that determination, Recovery Law Group is liable to the

Shastals “in the amount of any fees or charges in connection with providing

bankruptcy assistance to [the Shastals] that [Recovery Law Group] received, for

actual damages, and for reasonable attorneys’ fees and costs . . . .” 11 U.S.C. §

526(c)(2).

In its September 17th Order, the Court set an in-person evidentiary hearing for

October 20, 2025 to determine damages and ordered the parties to exchange witness

lists and proposed evidentiary hearing exhibits no later than October 13, 2025. The

Court’s September 17th Order cautioned that “[f]ailure to timely file and exchange

witness lists and exhibits may result in witnesses or exhibits being stricken.” The

September 17th Order further provided that “no adjournments or modification of any

of the dates set forth in this Order will be permitted except on written motion for

good cause shown.” (emphasis in original). The Court held an evidentiary hearing

on October 27, 2025 and this opinion constitutes the Court's findings of fact and

conclusions of law under Fed. R. Bankr. P. 7052.

I.

PRELIMINARY STATEMENT REGARGING EVIDENTIARY HEARING

AND RECOVERY LAW GROUP’S FAILURE TO APPEAR

As discussed below, the evidentiary hearing was adjourned from October 20,

2025 to October 27, 2025 solely to accommodate Recovery Law Group. Although

well aware of the date and time of the hearing, no one from or on behalf of Recovery

Law Group appeared at the October 27, 2025 evidentiary hearing.1 For the reasons

1 Nate Reznick, who identified himself as Recovery Law Group’s appellate counsel,

was present in the courtroom during the hearing but did not put his appearance on

the record.

placed on the record at the inception of the evidentiary hearing, the Court concluded

that it should proceed with the evidentiary hearing notwithstanding Recovery Law

Group’s unexplained absence. The Court’s reasons are reiterated below.

Recovery Law Group has been represented in this adversary proceeding since

or near its inception by Peter Mulcahy, Recovery Law Group’s General Counsel. At

a May 14, 2025 final pretrial conference and hearing on the United States Trustee’s

Motion to Approve Compromise (See Case No. 20-31468, Dkt. No. 268), Mr.

Mulcahy disclosed that he was suffering from an aggressive form of cancer and he

would not be able to continue as lead litigation counsel in this adversary proceeding.

Instead, he indicated that Recovery Law Group would need to engage successor

counsel (Dkt. No. 190, Transcript of May 14, 2025 Final Pre-Trial Conference, page

9, line 19-21; the entire exchange is set forth in endnote 1). i

At the conclusion of the hearing, the Court denied the United States Trustee’s

Motion to Compromise and, on May 19, 2025, issued an Order: (1) directing

Plaintiffs to file a motion for partial summary judgment to address the effect of the

Court’s Order granting summary judgment on Plaintiffs’ legal malpractice claim on

Plaintiffs’ claims under § 526; and (2) requiring Recovery Law Group to advise the

Court by July 11, 2025 whether Recovery Law Group was going to retain successor

counsel (Dkt. No. 160; full text at endnote 2).ii Notwithstanding this unambiguous

Order, neither Mr. Mulcahy nor anyone at Recovery Law Group advised the Court

whether successor counsel would be retained and, if so, by when.

In compliance with the Court’s May 19, 2025 Order, Plaintiffs filed their

Motion for Partial Summary Judgment on June 12, 2025 (Dkt. No. 162), and

Recovery Law Group, through Mr. Mulcahy, filed its response on July 10, 2025 (Dkt.

No. 183). A hearing on the motion for partial summary judgment was scheduled for

August 13, 2025, three months after the May 14, 2025 hearings, thereby giving

Recovery Law Group more than adequate time to find replacement counsel. To the

Court’s surprise, having received no written or telephonic request or motion to

adjourn, Mr. Mulcahy did not appear at the August 13, 2025 summary judgment

hearing. Instead, Morrie Lefkowitz, one of Recovery Law Group’s “local

attorneys/partners,” appeared on behalf of Recovery Law Group as one-time

“special counsel.” According to Mr. Lefkowitz, Mr. Mulcahy was unable to travel

due to health issues (Dkt. No. 200, recording at 1:55 – 4:55 of the August 13, 2025

hearing on Motions for Partial Summary Judgment; full transcript at endnote 3).iii

Mr. Lefkowitz did not know why Recovery Law Group failed to comply with this

Court’s Order, but nevertheless indicated that Mr. Mulcahy remained attorney of

record for the case. Id.

Following the hearing, the Court issued its September 17th Opinion holding

Recovery Law Group liable to the Shastals under 11 U.S.C. § 526 and ordered the

case to proceed to trial on the amount of damages only.2

On October 3, 2025, Recovery Law Group filed a Corrected Emergency

Motion to Extend Pretrial Deadlines At Least 30 Days. In that motion, Recovery

Law Group referenced four reasons for the requested emergency extension, none of

which reference Mr. Mulcahy’s health issues or the need to retain substitute counsel.3

2 Recovery Law Group had filed a motion for reconsideration of this Court’s

September 17, 2025 Opinion and Order. On October 6, 2025, this Court denied the

motion for reconsideration in a 16-page opinion (Dkt. No. 220).

3 The four reasons set forth in Recovery Law Group’s motion were:

(1) Recovery Law Group has a motion for reconsideration pending

before the Court which could eliminate the need for trial or materially

change the scope of proof, witnesses, and exhibits;

(2) due to the present government shutdown, the Court may be limited

in resources and the United States Trustee may not be able to attend the

hearing;

(3) the District Court has not yet ruled on Recovery Law Group’s

motion to withdraw the reference which, if granted in whole or in part,

could impact the pre-trial and trial schedule or obviate the trial entirely;

and

(4) the parties are preparing to mediate in good faith. With respect to

this last reason, the Court had previously ordered mediation and

required that it to occur no later than August 30, 2025. Due to Recovery

Law Group’s inaction, the mediation did not occur notwithstanding the

On October 6, 2025, the Court denied Recovery Law Group’s motion in a written

Order (Dkt. No. 221).

On October 8, 2025, less than a week after Recovery Law Group filed its

Emergency Motion to Extend Pretrial Deadlines, the Court held a telephonic status

conference requested by Plaintiffs’ counsel solely to discuss whether proofs would

be required on attorneys’ fees at the October 20, 2025 evidentiary hearing or whether

attorneys’ fees would be addressed at the conclusion of the litigation through the

submission of fee applications. Mr. Mulcahy appeared by telephone on behalf of

Recovery Law Group. During this status conference, Mr. Mulcahy unexpectedly

asked the Court to delay the trial date for at least 30 days. Although unmentioned in

Recovery Law Group’s motion filed just 5 days earlier, Mr. Mulcahy now claimed

that he had experienced two conditions unrelated to his cancer which necessitated

an adjournment: (i) he previously had sepsis, which put him in the hospital at the

time of the August 13, 2025 hearing (Dkt. No. 222, October 8, 2025 hearing at 9:20-

Court’s Order. Recovery Law Group’s sudden willingness to mediation

was therefore “too little, too late.”

(Dkt. No. 218). It was only at the October 8 status conference that Mr. Mulchay had

represented that he suffered from a collapsed lung and was prohibited from travel

for 30 days (Dkt. No. 222, October 8, 2025 status conference at 4:22).

9:40);4 and (ii) on October 3, 2025, he suffered from collapsed left lung (Id. at 4:22).5

According to Mr. Mulcahy, he was not permitted to travel by air for a month and,

moreover, would need at least 30 days to bring in successor counsel (Id. at 4:43).6

He also indicated that, while the hearing was only on damages, it was not simple

matter, and it would take successor counsel time to prepare. (Id. at 14:45-15:48).

Although opposing counsel was not unsympathetic to Mr. Mulcahy’s health

issues, he indicated that he had other trials scheduled in November and December.

If the evidentiary hearing was significantly delayed, he would not be available to try

the case until sometime in 2026 (Id. at 14:10-14:38).

Because this adversary proceeding has already suffered its fair share of delays,

the Court was loathe to again delay proceedings. Mr. Mulcahy knew he was ill and

had acknowledged as early as May 14, 2025 that he needed to seek replacement

counsel. He then failed to comply with the Court’s May 19, 2025 Order requiring

him to advise whether he was going to continue to represent his client or obtain

4 This contradicts Mr. Lefkowitz’s statements on the record that Mr. Mulcahy was

available appear by telephone at that hearing. (Dkt. No. 200, recording at 1:55 – 4:55

of the August 13, 2025 hearing on Motions for Summary Judgment).

5 Neither of these assertions were corroborated.

6 Later during the status conference, Mr. Mulcahy asks for all of the dates to be

pushed out 30 days and suggests that he might appear as counsel himself. (Dkt. No.

222, October 8, 2025 status conference at 11:15-11:45).

successor counsel. He raised these new health concerns suddenly, not in writing as

the Court’s previous Order required, but orally at a status conference intended solely

to address proofs regarding Plaintiffs’ attorneys’ fees.

Moreover, the October 20, 2025 evidentiary hearing was for the purposes of

determining “actual damages” only under § 526(c)(2) -- not a complicated matter.

Discovery had long since concluded and, notwithstanding this Court’s September

17th Order and October 8, 2025 Order Adjourning Evidentiary Hearing (Dkt. No.

223), Recovery Law Group did not file witness or exhibit lists. Thus, Recovery Law

Group’s presentation would be limited to cross-examining Plaintiffs’ witnesses and

closing argument. Nevertheless, the Court adjourned the evidentiary hearing to

October 27, 2025 in an effort to accommodate Mr. Mulcahy and Recovery Law

Group. This provided sufficient time to allow Mr. Mulcahy to travel by air or for

Recovery Law Group obtain replacement counsel, as it had committed to do in May

2025, while at the same time avoiding the need to push the evidentiary hearing into

the next calendar year.

Mr. Mulchay disagreed that replacement counsel could be brought up to speed

in three weeks but stated on the record with respect to the retention of successor

counsel, “I think that’s probably what’s going to have to happen” (Id. at 20:40-

20:51).

On October 27, 2025, the Court held the adjourned evidentiary hearing.

Plaintiffs’ counsel appeared at the hearing along with their clients and witnesses. No

one appeared at the hearing on behalf of Recovery Law Group. Moreover, no one

on behalf of Recovery Law Group alerted the Court -- by telephone or in writing --

that no one would be appearing at the hearing on behalf of Recovery Law Group.

Not coincidentally, only Recovery Law Group’s appellate counsel was present in the

courtroom, although he did not place his appearance on the record or participate in

the hearing.

As detailed in this Court’s prior opinions (See, e.g., Dkt. Nos. 44, 202, and

204), this was not the first time Recovery Law Group failed to appear at a scheduled

hearing, failed to comply with Court orders, failed to properly file papers or

pleadings, or failed to timely file papers or pleadings. In light of the delays in this

case, Recovery Law Group’s history of non-compliance or poor compliance, its

failure to obtain replacement counsel notwithstanding its repeated promises to the

contrary, the inconsistent and unsubstantiated excuses proffered by Recovery Law

Group for additional adjournments, and the adjournment granted notwithstanding

the unexpected oral request at a status conference utterly unrelated to scheduling,

the Court elected to go forward with the evidentiary hearing. And, contrary to Mr.

Mulcahy’s assertion at the October 8th status conference, this evidentiary hearing,

albeit heart wrenching, was a “simple matter.”

II.

ANALYSIS

Bankruptcy Code § 526(a) was established to curb abuse of the bankruptcy

system, including misconduct by attorneys. Once misconduct has been established,

the party in violation is liable for “any fees or charges in connection with providing

bankruptcy assistance to such person that such debt relief agency has received, for

actual damages, and for reasonable attorneys’ fees and costs. . . .” 11 U.S.C.

§526(c)(2).

Actual damages consist of both economic damages and non-economic

damages. Non-economic damages include damages for emotional distress. Grimm

v GPG Processing, LLC, No. 2:18-CV-1522, 2019 WL 4508921, at *2 (S.D. Ohio,

September 19, 2019), report and recommendation adopted No. 2:18-CV-1522, 2019

WL 4958073 (S.D. Ohio, October 8, 2019)(actual damages include out-of-pocket

expenses along with emotional distress damages under the FDCPA); In re Tapp, No.

19-62481, 2020 WL 4810074 at *3 (Bankr. E.D. Mich., July 10, 2020) (emotional

damages qualify as “actual damages” under § 362(h)); In re Weaver, No. 17-32042,

2023 WL 3362064, at *7–8 (Bankr. E.D. Mich., May 10, 2023)(emotional distress

damages awarded for violation of the discharge injunction based on debtor’s

testimony and documentary evidence).

At the evidentiary hearing, Plaintiffs’ offered into evidence five exhibits: (i)

a summary of economic damages totaling $199,322.15; (ii) Summary of Assets and

Liabilities and Certain Statistical Information and the Statement of Attorney for

Debtor(s) Pursuant to F.R.Bankr.P. 2016(b) forms, both of which were filed in the

main bankruptcy case; (iii) copies of cashier checks showing payments to Lapeer

Meadows, where the Shastals’ mobile home trailer was situated and to Michael

Conley, the previous owner of the mobile home trailer; (iv) Customer Account

Record of Pod Enterprises, from whom the Shastals rented storage pods to store their

belongings after their eviction; and (v) the Chapter 7 Trustee’s Cash Receipts and

Disbursements Record. The Court carefully scrutinized each of these exhibits

before admitting them into evidence. Plaintiffs also called four witnesses to the

stand: (i) Samuel Sweet, the chapter 7 Trustee; (ii) Debtor/Plaintiff Kimberly

Shastal; (iii) Shannon Dockery, Ms. Shastal’s closest friend for over 40 years; and

(iv) the Shastals’ son, Zach Shastal.

A. ECONOMIC DAMAGES

In support of Plaintiffs’ claim for economic damages, Plaintiffs relied on Sam

Sweet, the Chapter 7 Trustee and Plaintiffs’ Exhibits 1 through 5. Mr. Sweet first

explained why, in the first place, the Shastals’ bankruptcy filing was unnecessary.

According to Mr. Sweet, and later corroborated by Ms. Shastal, the genesis of the

Shastals seeking bankruptcy advice was their fear about needing to protect their

marital home against a judgment by New Home Plate Lounge against Mr. Shastal

only and collection actions undertaken by New Home Plate Lounge. The Shastals’

home, however, was held as tenants by the entirety and, as Mr. Sweet explained, the

home was thereby protected from the claims of Mr. Shastal’s individual creditors.7

Mr. Sweet also testified about his efforts to engage with the Shastals’ counsel about

the case and a possible conversion of the case to chapter 13 so that a plan to save the

home could be proposed, among other issues. Although Mr. Sweet opined that the

bankruptcy case was unnecessary to protect the home from the start, and that

conversion to chapter 13 would have allowed the Shastals to propose a chapter 13

bankruptcy plan to save their home, the inaction of the Shastals’ counsel left him no

choice but to move forward with a sale of the home to monetize the considerable

non-exempt value for the benefit of creditors.

Mr. Sweet then testified concerning the economic damages suffered by the

Shastals as itemized in the Summary of Damages, Exhibit 1 (Dkt. No. 225). These

damages included the attorney’s fees paid to Recovery Law Group, the case filing

fee, the conservatively estimated loss of the increased value in the home over the

last several years, the amount paid to purchase a mobile home trailer and the trailer

7 Mr. Sweet’s opinion is consistent with the Expert Report of Stuart Gold filed on

December 19, 2024 (Dkt. No. 111).

lot rent, Ms. Shastal’s rent for alternative quarters prior to acquisition of the trailer,

a home cleaning fee, home sale closing costs, Trustee fees and fees for his counsel

in connection with sale, and payment of sale proceeds totaling $43,751.81 to New

Home Plate. All of these damages were adequately documented and supported in

Exhibits 2 through 5 and by Mr. Sweet’s testimony. Accordingly, the Court finds that

an award of economic damages to the Shastals in the amount of $199,332.15 is

warranted and appropriate.

B. NON-ECONOMIC DAMAGES

In determining the amount of non-economic damages for emotional distress,

there must be proof that there is emotional harm that qualifies for an award of actual

damages and that there is a causal link between the violation and the resulting injury.

In re Weaver, No. 17-32042, 2023 WL 3362064, at *7–8 (Bankr. E.D. Mich., May

10, 2023)(addressing emotional distress damages arising from repeated violations of

discharge injunction); Perviz, 302 B.R. at 371. Courts have allowed compensatory

damages for emotional distress, absent any demonstrable out-of-pocket expenses, if

two conditions are met: (1) the debtor clearly suffered some appreciable emotional

and/or psychological harm; and (2) the actions giving rise to the distress were severe

in nature. Id. The two factors are balanced: the greater the extent of the creditor's

violations, the less corroborating evidence will be needed to establish compensable

emotional distress. Id. Conversely, the less severe the creditor's conduct, the more

important corroborating evidence will become to sustain a request for compensatory

damages for emotional/mental distress. Id. Corroborating evidence is helpful but not

always needed. Id., citing In re Poole, 242 B.R. 104, 112 (Bankr. N.D. Ga. 1999). In

other words, if the creditor's conduct is so egregious and extreme that one would

normally expect emotional distress to occur, then a court may allow such damages

without requiring additional evidence if it finds the debtor's testimony to be credible.

See, In re Jones, 603 B.R. 325, 331-332, 335 (Bankr. E.D. Ky. 2019) (emotional

distress damages awarded based solely on Debtor's testimony regarding how

creditor's actions post-discharge caused her “tremendous stress and embarrassment

... as well as the erosion of her familial relationships.”)

Here, there was ample evidence that the Shastals suffered demonstrable

economic damage so the Shastals’ emotional distress is compensable. Even in the

absence of economic injury, however, the Shastals would be entitled to recovery for

their emotional distress because, as described below, they clearly suffered

appreciable emotional and/or psychological harm. And, as detailed in this Court’s

prior opinions, Recovery Law Group’s actions giving rise to the distress were very

severe in nature.

The Shastals’ emotional distress damages were the subject of testimony by

Ms. Shastal, and corroborated by the testimony of her close friend, Shannon

Dockery, and by Ms. Shastal’s son, Zach Shastal. The Shastals have been married

for over 30 years and have three children, Zach being the youngest. For the seven

years prior to the bankruptcy filing, they lived in a 100 year old Victorian home in

North Branch, Michigan. The home, as described by Ms. Dockery, was beautiful

with amazing woodwork. Zach testified that it was the nicest home in a nice

neighborhood and his parents’ dream home. The backyard had an in-ground pool

and a fenced yard “perfect for their 5 dogs.” There was a park down the street where

Ms. Shastal would regularly take her grandchildren. In addition to Mr. and Mrs.

Shastal, their son Zach, then in his early 20’s lived with them. Because Zach shared

custody of his daughter, she too lived part time in the home. Ms. Dockery, her closest

friend for over 40 years, lived one street over and she would see Ms. Shastal every

day.

Ms. Shastal described the house as a “home,” a joyous place, the center of

their family life, a place for all of the children and grandchildren to gather on

holidays, and regularly for pool parties, cook outs and other celebrations.

The Shastals reached out to Recovery Law Group because of the judgment

obtained by New Home Plate Lounge and subsequent collection action taken by it.

Mr. Shastal located Recovery Law Group through the internet. When asked what

they hoped to accomplish, Ms. Shastal said “don’t take our stuff, don’t take our home

. . . . . We didn’t have much, but what we had was ours.” Protecting the home was

everything.

Recovery Law Group’s violations of § 526(a) have been thoroughly described

in this Court’s previous opinions (See, Dkt. Nos. 124, 202 and 203), and so it is

unnecessary to belabor them here. Recovery Law Group’s violations, and the impact

these violations have had on the Shastals, inform this Court’s award of non-

economic damages. These violations resulted in the Shastals learning they were

being evicted from their dream home during Christmas 2021, packing over the

holiday season and with the eviction occurring in early January 2022. As Ms. Shastal

described, they were scared and confused, not understanding what had happened to

cause this sudden eviction. They were forced to move their belonging into storage

pods because they could not find storage facilities. Ms. Shastal was forced to find

living arrangements for her three remaining dogs (two had died prior to the eviction).

Because they didn’t have sufficient savings, Mr. and Mrs. Shastal were forced to live

apart after 30 years of marriage. Ms. Shastal moved in with her sister-in-law, to

whom she paid rent, and Mr. Shastal moved to Wisconsin to find work. Their son

and granddaughter also had to make alternative living arrangements. Ultimately, the

Shastals moved into a used trailer in a mobile home park, spending what little equity

they received from the sale of their home to make needed repairs.

Ms. Shastal, who previously worked part-time for enjoyment, not economic

necessity, now needs to work full time at Walmart. She described herself as often

feeling depressed and numb, simply going to work and coming home and going right

to sleep. She frequently skips meals, suffers severe anxiety attacks, and was placed

on anti-depressant medication. She further testified that, while she is grateful to

have a roof over her head, she hates living in a cramped trailer with no space for her

children and grandchildren to gather as a family.

Prior to the bankruptcy filing, Mr. Shastal was described by Ms. Shastal and

their son Zach as being compassionate and caring, fun and outgoing, enjoying life,

someone who took care of himself, and a lover of the outdoors who enjoyed fishing

and hunting. Since losing the home, Ms. Shastal says she no longer recognizes him

and their once close relationship has suffered. She describes him as being severely

depressed and inactive, sitting on the couch all day watching television. Zach

describes his father as “a shell of himself,” a description corroborated by Ms.

Dockery.

Ms. Dockery testified that Ms. Shastal no longer cares if she eats, and Ms.

Dockery often comes over to cook for them because Ms. Shastal no longer has the

energy or will to cook for herself. Zach Shastal and Ms. Dockery both testified that

Ms. Shastal has lost a lot of weight and cries frequently, and Ms. Dockery described

how she would lie in bed next to Ms. Shastal and try to comfort her while she cried.

The Court also noticed how gaunt Ms. Shastal appeared and how difficult it was for

her get through her testimony without crying.

The Court found all of the witnesses to be extremely credible. It is abundantly

clear from the testimony of Ms. Shastal, as corroborated by the testimony of Ms.

Dockery and Zach Shastal and the Court’s own observations, that the Shastals’ lives

were shattered by Recovery Law Group, and the sting of loss was made all the more

painful because it was unnecessarily caused by the very people in whom they placed

their trust and who, in turn, promised to help them. Moreover, given Mr. Shastal’s

advanced age, he is now 78, an economic recovery is unlikely.

At the conclusion of the evidentiary hearing, the Shastals’ counsel asked for

non-economic damages of (i) $250,000 for the pain and trauma suffered by the

Shastals in connection with the loss of their home and family life, plus (ii) $250 per

day for the continued stress of the bankruptcy case over the past 5 years, the

scattering of the family, and being forced to wake up in a “hated” trailer, among

other considerations, which counsel calculated at $250 x 940 days or $235,000, plus

(iii) $250 per day for another two years, or $182,000, to account for Recovery Law

Group’s “proclivity for delay” and until appeals are decided and it becomes more

likely that the Shastals will finally see some compensation, for a grand total of non-

economic damages of $667,500.

While the Court understands how this amount was calculated and appreciates

the severe emotional and physical toll this case has had on the Shastals and, indeed,

their entire family, the Court concludes that the amount requested for non-economic

damages is, in part, duplicative and excessive and, with respect to the two year per

diem request, unduly speculative. The Court, therefore, rejects the per diem requests

and awards the Shastals non-economic damages in the amount of $250,000, for a

combined award for economic and non-economic damages totaling $449,332.15.

Plaintiffs’ counsel shall file fee applications as permitted under § 526(c) within 21

days of the date of Judgment entered in connection with this Opinion, and Recovery

Law Group shall have 14 days thereafter to review and respond. Fees which are

finally determined and awarded will be added to the Judgment amount. The Court

will prepare a separate Judgment in accordance with this Opinion.

Signed on November 6, 2025 SE,

Ky /s/ Joel D. Applebaum

□ iste fs Joel D. Applebaum

7 Be United States Bankruptcy Judge

‘THE COURT:

... But let me ask this question without prying too deeply: Do either

of you [Assistant United States Trustee Ronna Jackson and Peter

Mulcahy, General Counsel of and attorney representing Recovery Law

Group] have health issues currently that's going to -- that I need to take

into consideration in terms of when we set trial dates, or next hearing

dates, or deadlines for additional filings? I'd like to take that into

20

consideration and respect your situations now without – and I know,

Mr. Mulcahy, you've had health issues now that you're undergoing

treatment for and so let me start with you.

Do you know, or have a sense of what's going on?

MR. MULCAHY:

Thank you, Your Honor. Unfortunately, I've had -- the kind of cancer

that I have is very aggressive, and it's highly dangerous. And we had a

surgery that occurred on May 1st, and we're hoping we're able to

remove it. What happened is right after the surgery, the wound itself

became infected. It aggravated the cancer, which has now spread.

And so I'm going to have to start tomorrow starting with more

chemotherapy in the hopes that maybe we can arrest some of the spread

here, and just to plainly say, it takes my life. That tends to be what

happens with this type of cancer. It's very aggressive and moves very

fast.

As of right now, I have to be honest with the Court. I do not know that

I could actually do the trial. We would have to seek other trial counsel

to come into this. I know that is not what the Court wants to hear, or the

other parties that we have been doing this so long.

But unfortunately that is the state of affairs as it is. I apologize to all of

the other parties, but this is something I wish I could control more than

anybody knows. But it's just doing what it's going to do.

And so we're hopeful that starting chemo again will be able to arrest

this, but in the way I'm looking at it, it's probably not something I can

really do, and it's unfair to the position of Recovery Law Group or to

Bedford to say that I can do a trial. I'm not sure that I can, so we're

probably going to have to -- not probably. I'm going to have to look

for alternate counsel to take over and to step in. (emphasis added).

THE COURT:

I understand, and I'm really sorry to hear that. Not for myself,

obviously, but for you. I'm sorry you're going through this, and we will

do our best to accommodate your schedule and treatment.

MR. MULCAHY:

I appreciate that, Your Honor.

THE COURT:

But it sounds like -- I've honestly never had to confront this issue as a

judge, so help me. It sounds like you are going to have to transition.

And so I guess the question I have is: How are you going to do that, and

will it be someone in Recovery Law Group, or outside counsel, and

when do you think that process -- it sounds like that's a foregone

conclusion, regardless of how your health comes out.

We, of course, wish for a speedy recovery. And even if it is a complete

and speedy recovery, as we all hope, it sounds like you're saying there

is going to be a transition. How do you view it?

MR. MULCAHY:

I appreciate that, Your Honor, that you understand.

First of all, I have to say Desirae Bedford has left Recovery Law Group,

so she's no longer even employed by the company. Not that she would

take over as trial counsel. I don't think she's qualified nor prepared to

do that.

As I sit with the general counsel and also the lead litigation attorney

within Recovery Law Group, this has been going on, as everybody

knows, for more than five years. The issues are complex.

I do not feel there's anybody within Recovery Law Group who is a

litigator able to handle this.

I do have some contacts within the Eastern District of Michigan,

separate trial counsel. I don't know how long it would take to get them

up to speed.

But to answer your question, it would be from outside of the firm. It

would be separate counsel would be representing it.

And to be fair, you know, I would ask that they would have to be given

some leeway to get caught up to speed as to everything that's going on

here.

Of course, for whatever reason that the compromise doesn't happen in

the first case, in the main case, that would take even longer, I would

think.

THE COURT:

All right. Thank you. I appreciate that.

(Dkt. No. 190, Transcript of May 14, 2025 Final Pre-Trial Conference, page 8, line

10 through p. 11, line 14).

ii The Order stated:

IT IS HEREBY ORDERED that on or before June 13, 2025, the

Adversary Proceeding Plaintiffs shall file a motion for partial summary

judgment and supporting brief addressing the sole issue of what effect

the Court’s granting of partial summary judgment on the legal

malpractice claim in Count 1 of Plaintiffs’ Complaint has on Count 2,

alleged violation of 11 USC Sec 526.

IT IS HEREBY ORDERED that Defendants shall have until July 11,

2025, to file a response and Plaintiffs shall have until July 18, 2025, to

file an optional reply.

IT IS HEREBY ORDERED that contemporaneous with Defendants’

filing they shall advise the Court whether they will be retaining successor

counsel as a result of current counsel’s illness.

(emphasis added).

iii The relevant exchange follows:

COURT: In my order regarding 526, Mr. Mulcahy was supposed to

file by July 18th, a statement as to who successor counsel, if there was

going to be successor counsel, and who. Are you now successor

counsel, Mr. Lefkowitz?

LEFKOWITZ: I am not Judge. I am here for this particular hearing

only . . .

COURT: Well, what does it take to get Recovery Law Group to

comply with an order?

LEFKOWITZ: My understanding of that order was that, in the event

there was going to be replacement counsel, that he would inform the

Court. That was Mr. Mulchay’s interpretation of it. At this point in

time, he is still able to handle the matters before the Court, other than

appear in person before the Court, because of his illness.

COURT: The order says: it is hereby ordered that, contemporaneous

with defendants filing, in response to the motion we are going to be

arguing today, they shall advise the Court whether they will be

retaining successor counsel as a result of current counsel’s illness,

right? They are to advise the Court. One way or the other. Do you

know whether or not Mr. Mulcahy is intending on continuing as

counsel.

LEFKOWITZ: In this matter yes. His indication to me was that, if

there was an adversary proceeding, if the adversary proceeding

continued, then they may hire outside counsel for the adversary

proceeding.

COURT: That is exactly what he was supposed to tell us on the 18th.

And we need to wait now again for him to decide that? Did he not

give you any indication?

LEFKOWITZ: Any indication as to?

COURT: Whether or not there is going to be successor counsel?

LEFKOWITZ: As of right now there is no successor counsel.

COURT: Are you planning on filing a notice of appearance on behalf

of Recover Law Group in this adversary?

LEFKOWITZ: Only a special appearance for this hearing only.

COURT: So you are prepared to argue today on this hearing?

LEFKOWITZ: Best I can Judge.

COURT: And Mr. Mulcahy who is apparently still going to continue

as counsel for Recovery Law Group is not here today because of his

illness?

LEFKOWITZ: That is correct.

COURT: Could he have appeared by telephone?

LEFKOWITZ: Yes, he in fact indicated to me that if the Court…

COURT: Could he have reached out to the Court and said I would

like to appear by telephone?

LEFKOWITZ: Once again Judge, he indicated to me that he had.

COURT: He has not.

(Dkt. No. 200, recording at 1:55 – 4:55 of the August 13, 2025 hearing on Motions

for Summary Judgment).