# Robson, Miller & Osserman v. D.H. Overmyer Telecasting Co. (In Re D.H. Overmyer Telecasting Co.)

> United States Bankruptcy Court, N.D. Ohio · August 26, 1987 · 77 B.R. 128

URL: https://www.frixlaw.com/law-library/cases/2021298

## Case

- **Full name:** In Re D.H. OVERMYER TELECASTING CO., INC., Debtor and Debtor-In-Possession. ROBSON, MILLER & OSSERMAN, Et Al, Plaintiffs, v. D.H. OVERMYER TELECASTING CO., INC., Defendant
- **Court:** United States Bankruptcy Court, N.D. Ohio
- **Decided:** August 26, 1987
- **Citations:** 77 B.R. 128; 1987 Bankr. LEXIS 1365
- **Precedential status:** Published
- **Opinion:** Opinion by Ray
- **Judges:** Ray
- **Cited by:** 3 later opinions in the Frix Law Library

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## Opinion text

MEMORANDUM OF OPINION
JOHN F. RAY, Jr., Chief Judge.
This matter came on for hearing on the claim of the plaintiff, Robson, Miller & Osserman, and the objection and counterclaim of defendant, D.H. Overmyer Telecasting Co., Inc. (“Telecasting”).
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FINDINGS OF FACT
I.
The Background
1.1
The Telecasting Chapter 11.
On February 6, 1981, Telecasting filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 1101 ,
et seq.
(Telecasting Chapter 11 Docket, 2/6/81 Entry, Deft. Ex. 54) Pursuant to sections 1107 and 1108, Telecasting retained possession of its assets and continued in the operation of its business as a debtor-in-possession. On April 25, 1986, the Court entered an order confirming Telecasting’s amended plan of reorganization. (Telecasting Chapter 11 Docket, Entry 1421, Deft. Ex. 54)
1.2
The Robson Firm’s Proof of Claim.
On March 23, 1981, Robson & Miller, a New York partnership comprised of Morton S. Robson and Kenneth N. Miller, filed a proof of claim in this case, seeking payment of $45,596.12 “for legal services rendered and expenses incurred” on behalf of Telecasting by Robson & Miller and its predecessor firm, Robson & Toboroff, between June, 1977 and January 31, 1981. (Robson Firm Proof of Claim, Deft. Ex. 38) The only “support” for Telecasting’s alleged indebtedness to the Robson firm attached to the proof of claim was an invoice from Robson & Miller dated February 1, 1981, showing the sum of $42,973.50 due for “Total Legal Fees” and the sum of $2,622.62 due for “Total Disbursements.” (Robson Firm Proof of Claim, Deft. Ex. 38, p. 2; Miller, 4 Tr. 328)
1.3
Telecasting’s Objection and Counterclaim.
Oh September 18, 1984, Telecasting, in response to the proof of claim, filed an objection to claim and counterclaim alleging,
inter alia,
breach of fiduciary duty, legal malpractice, conflict of interest and fraud on the part of the Robson firm and Morton S. Robson, thereby converting the proof of claim into an adversary proceeding. (Robson Adversary Proceeding Docket, Entry 1) Bankruptcy Rule 3007. On April 18, 1986, Telecasting filed a second amended objection to claim and counterclaim seeking,
inter alia,
general damages in the amount of at least $3,500,-000.00, and punitive damages in an unspecified amount. (Robson Adversary Proceeding Docket, Entry 102) This adversary proceeding went to trial on the Robson firm’s proof of claim and Telecasting’s second amended objection to claim and counterclaim.
1.4The Robson Firm’s Amended Proof of Claim.
On October 25, 1984, at Mr. Overmyer’s criminal trial in Louisville, Kentucky, Mr. Robson provided to the government a schedule of time charges, disbursements and payments received showing time charges of $43,570.50 and disbursements of $2,691.62, a total of $46,-262.12, for Telecasting work. (Louisville Government Ex. 11, Deft. Ex. 39; Louisville Transcript, Deft. Ex. 67, pp. 245-46) On the sixteenth day of trial, June 3, 1987, after resting its affirmative case, the Robson firm withdrew its amended proof of claim. (29 Tr. 3555, 3557-61) The Robson firm thereby conceded that it was not entitled to any compensation for any services performed, or claimed to have been performed, for Telecasting.
II.
The Trial of the Adversary Proceeding
2.1
The Trial.
The trial lasted 16 days, commencing on Monday, May 4, 1987, and concluding on Wednesday, June 3, 1987. During this period, 3,564 pages of proceedings were transcribed. The following witnesses were called by Telecasting:
Jacques A. Mitchell, III,
president and chief operating officer of Houlihan/Law-rence, Inc. (Mitchell, 1 Tr. 66)
Michael J. Carrieri,
secretary-treasurer of D.H. Overmyer Co., Inc., debtor-in-possession (Carrieri, 3 Tr. 246)
Kenneth N. Miller, Esquire,
a partner of the law firm of Robson & Miller (Miller, 3 Tr. 286-87)
Andrew C. Edgerton,
former director of property management for D.H. Over-myer Co., Inc., debtor-in-possession. (Edgerton, 7 Tr. 608-09)
Morton S. Robson, Esquire,
a partner of the law firm of Robson & Miller (Robson, 9 Tr. 810)
Ellis M. Lasberg,
a builder and developer of large multi-unit residential projects in
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Westchester County, New York (Las-berg, 20 Tr. 2214)
Eugene Albert,
a highly qualified West-chester County real estate appraiser and president of The Albert Appraisal Company, Inc. (Albert, 20 Tr. 2260; Albert Professional Qualifications, Deft. Ex. 233)
David A. Raíble,
president of D.H. Over-myer Co., Inc., debtor-in-possession (Raí-ble, 23 Tr. 2683)
H. Buswell Roberts, Esquire,
a partner of the law firm of Nathan & Roberts and former secretary and chairman of the Grievance Committee of the Toledo, Ohio Bar Association (Roberts, 24 Tr. 2846)
Howard L. Klein, C.P.A.,
a partner of the accounting firm of Page, Saltz & Shamis in Beachwood, Ohio (Klein, 25 Tr. 2890)
Testimony of the following witnesses was presented by Telecasting through the reading of deposition transcripts.
Albert M. Kaufman, Esquire,
a partner of the law firm of Ballon, Stoll
&
Itzler (Kaufman Dep., 16 Tr. 1702)
Morton S. Robson, Esquire
(Robson Hadar Adversary Proceeding Dep., 16 Tr. 1707; Robson New York Dep. 17 Tr. 1819)
Howard D. Ressler, Esquire,
formerly a partner of the Robson firm when it was known as Robson & Toboroff (Ressler New York Dep., 25 Tr. 2973; Ressler Dep., 25 Tr. 2987)
Michael J. Venditto, Esquire,
a former associate of the Robson firm (Venditto Dep., 25 Tr. 3020)
Testimony of the following witnesses was presented by Telecasting through the reading of transcripts of prior trials:
Morton S. Robson, Esquire
(Robson Pro Haec Vice Testimony, 16 Tr. 1709; Robson Louisville Testimony, 16 Tr. 1787; Robson New York Fee Trial Testimony, 17 Tr. 1886)
Howard C. Cook, Esquire,
deceased, former trustee of the Harrison M. Over-myer Trust. (6/20/83 Cook Hadar Adversary Proceeding Testimony, 27 Tr. 3219; 7/19/83 Cook Hadar Adversary Proceeding Testimony, 27 Tr. 3234; 7/8/83 Mitchell-Cook Telephone Call Recording, 27 Tr. 3252)
The following witness was called by the Robson firm:
Kenneth N. Miller, Esquire
(Miller, 27 Tr. 3284) Testimony of the following witnesses was presented by the Robson firm through the reading of deposition transcripts:
Michael J. Venditto, Esquire
(Venditto Dep., 29 Tr. 3509; Venditto Second Dep., 29 Tr. 3528)
Howard D. Ressler, Esquire
(Ressler New York Dep., 29 Tr. 3531; Ressler Dep., 29 Tr. 3536)
Testimony of the following witness was presented by the Robson firm through the reading of a transcript of a prior trial:
Edmund M. Connery, Esquire,
former Overmyer house counsel (Connery Hadar Adversary Proceeding Testimony, 28 Tr. 3454)
2.2
The Parties.
a.
The Plaintiffs.
The plaintiffs in this adversary proceeding are Robson & Miller, formerly known as Robson Miller & Osser-man, formerly known as Robson & Miller, formerly known as Robson & Toboroff (the “Robson Firm”), Morton S. Robson, Kenneth N. Miller and Richard A. Osserman.
b.
The Defendant.
The defendant in this adversary proceeding is D.H. Over-myer Telecasting Co., Inc.
III.
Ballon, Stoll & Itzler
3.1
Mr. Robson’s Background.
Mr. Robson graduated from St. John’s University Law School in 1949 and thereafter engaged in the private practice of law. (Robson, 9 Tr. 811) From 1950 through 1953, Mr. Robson was a partner with his brother, Eugene, in the firm of Robson & Robson. (Robson, 9 Tr. 812) From 1953 through 1961, Mr. Robson was an attorney with the United States Attorney’s office for the Southern District of New York, and served as interim United States Attorney for four months between S. Hazard Gillespie and Robert Morgenthau. (Robson, 9 Tr. 812-14) In 1961, Mr. Robson reentered the private practice of law as a partner with the law firm of Marshall, Bratter,
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Greene, Allison & Tucker in New York, New York. (Robson, 9 Tr. 814) In 1969, Mr. Robson left Marshall Bratter and practiced law with an associate for approximately a year. (Robson, 9 Tr. 815) Thereafter, Mr. Robson was a partner in the firm of Stanger & Robson for one and one-half years. (Robson, 9 Tr. 816) Upon the dissolution of Stanger & Robson, Mr. Robson became a partner in the firm of Zissu, Halper & Martin, which changed its name to Zissu, Lore, Halper & Robson. (Robson, 9 Tr. 817) Mr. Robson’s association with Zissu Lore lasted approximately four years; he left that firm because he was “unable to deal with [his] co-managing partner whose personality [he] found very difficult.” (Robson, 9 Tr. 817) In early 1976, Mr. Robson joined the law firm of Ballon, Stoll & Itzler. (Robson, 9 Tr. 818) By his own admission, Mr. Robson is not a bankruptcy expert. (Robson, 9 Tr. 841, 11 Tr. 1069, 1089, 14 Tr. 1454, Robson New York Dep., 17 Tr. 1823)
3.2
Mr. Robson’s Association with Daniel Harrison Overmyer.
Mr. Robson first became involved in representing Daniel H. Overmyer at the time that Mr. Robson was with Ballon, Stoll & Itzler. (Robson, 9 Tr. 900-01) Mr. Overmyer controlled a system of warehouses and a Toledo, Ohio television station, both of which were in Chapter XI. (Robson, 9 Tr. 823-24, 13 Tr. 1398-99, 14 Tr. 1507-08)
See generally Hadar Leasing International Co. v. D.H. Overmyer Telecasting Co. (In re D.H. Overmyer Telecasting Co.),
23 B.R. 823 (Bankr.N.D.Ohio 1982)
(“Hadar Decision
”),
aff’d,
53 B.R. 963 (N.D.Ohio 1984),
aff’d mem.,
787 F.2d 589 , 590 (6th Cir.1986) (3/7/86 Court of Appeals Decision, Deft. Ex. 227). Mr. Robson has described Mr. Overmyer as “a very creative man who literally has made fortunes for himself over his lifetime.” (Robson Opening Statement, Robson New York Fee Trial, 17 Tr. 1904;
see
Mitchell, 1 Tr. 73) “Mr. Overmyer called me at home and spoke to me for between half an hour and an hour literally every single night of the week for years.... Mr. Over-myer called our office two or three times a day and always asked to speak to me if I was there ... there was hardly a day in my
life during seven years when I didn’t speak with or meet with Mr. Overmyer_” (Robson Opening Statement, Robson New York Fee Trial, 17 Tr. 1898-99) “[0]nce I started representing Mr. Overmyer, there was hardly a day in my life when I didn’t spend some time talking to him. Mr. Over-myer became enamored of my ability....” (Robson Opening Statement, Robson New York Fee Trial, 17 Tr. 1903) “Mr. Overmyer indicated he wanted me to be his attorney for all
things...”
(Robson Opening Statement, Robson New York Fee Trial, 17 Tr. 1904) Other persons were frequently excluded from telephone conferences and meetings between Mr. Overmyer and Mr. Robson. (Edgerton, 7 Tr. 618; Raíble, 23 Tr. 2688-89; Mitchell, 2 Tr. 177-78; Ressler Dep., 25 Tr. 3008-09; Venditto Dep., 29 Tr. 3511) In addition to working on Mr. Overmyer’s Chapter XI proceedings, Mr. Robson also advised Mr. Overmyer with respect to: potential acquisitions, a potential public offering and financial problems for Peerless Manufacturing Corporation, an Overmyer company; a Chapter XI filing for Gulf Manufacturing Company, another Overmyer company; P & F Industries; Vornado; Schenleys; securities and litigation matters for R.T. Systems, Inc., a public company controlled by Mr. Overmyer; American Export Lines; Isbrantsen; Allan Wood Steel; Searle; personal tax problems; the Committee To Eliminate Waste and Inefficiency in Government, a committee to elect Mr. Overmyer Vice President of the United States; an attempted purchase of the Chrysler Building that was proposed by Mr. Robson; Jacques A. Mitchell Realty Corp.; General Real Estate Funding Corp.; purchase of the Houlihan real estate agency in Westchester County; an effort to extricate American Guaranty Financial Corporation, a small Oregon life insurance company, from a disastrous coal port venture; and Fremont Energy Corporation, a Denver oil company that was in financial difficulty. (Robson, 12 Tr. 1168-78, 1193-97; Robson Louisville Testimony, 16 Tr. 1791; Robson Opening Statement, Robson New York Fee Trial, 17 Tr. 1904; Mitchell, 2 Tr. 165-66, 168-72; 11/18/77 Robson Firm Time Slip, Deft. Ex. 106; 9/23/80
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Robson Firm Time Slip, Deft. Ex. 107) Mr. Overmyer never made business decisions until after consulting with Mr. Robson. (Mitchell, 2 Tr. 177-78) It was Mr. Over-myer’s instruction that whenever any legal matter arrived at the Overmyer office, it was to be photocopied and messengered to Mr. Robson immediately. (Raíble, 23 Tr. 2690) Mr. Robson allowed Mr. Overmyer to set up offices in the Robson & Miller conference room after The First National Bank of Boston (“FNBB”) took over the Overmyer offices on July 14, 1983. (Robson, 12 Tr. 1197, 21 Tr. 2498-99; Miller, 27 Tr. 3352-55; Mitchell, 2 Tr. 189-91) Mr. Robson telephoned Mr. Overmyer to congratulate him on his directed acquittal of criminal charges, after Mr. Overmyer had been found guilty by a jury in Akron, Ohio. (Robson, 12 Tr. 1198) Mr. Robson was a guest at a number of social functions at Mr. Overmyer’s home in Chappaqua, West-chester County, New York, and at his daughter’s home next door. (Robson, 14 Tr. 1452-53; Raíble, 23 Tr. 2690-91)
3.3
The $10,000.00 Telecasting Retainer..
On September 9, 1976, Telecasting filed a “Petition” for the retention of Bal-lon, Stoll & Itzler as “special counsel” in the Telecasting Chapter XI supported by an affidavit of Mr. Robson. (9/9/76 Ballon Stoll Retention “Petition,” Deft. Ex. 35; 9/9/76 Robson Ballon Stoll Retention Affidavit, Deft. Ex. 36) The “Petition” requested authorization to pay Ballon, Stoll & Itz-ler “an advance retainer of $10,000 against the rendition of services performed and to be performed, providing, however, that [Ballon, Stoll & Itzler] shall be accountable to [the] Court for the total value of the services rendered and to be rendered and upon the determination of such services as special counsel be authorized to make an application for allowances for all the services rendered to the debtor-in-possession.” (9/9/76 Ballon Stoll Retention “Petition,” para. 9, Deft. Ex. 35, p. 3) Mr. Robson personally represented under oath in his affidavit that “[y]our deponent
[i.e.,
Morton S. Robson] is requesting ... that your deponent’s firm be accountable to the Court for the value of the services rendered and to be rendered....” (9/9/76 Robson Ballon Stoll Retention Affidavit, para. 11, Deft. Ex. 36, p. 3) On September 10, 1976, the Bankruptcy Court entered an order authorizing the retention of Ballon, Stoll & Itzler as special counsel in the Telecasting Chapter XI, authorizing Telecasting to pay the requested $10,000.00 retainer, and directing Ballon, Stoll & Itzler to file a fee application upon completion of the services. (9/10/76 Ballon Stoll Retention Order, Deft. Ex. 37, p. 1) Telecasting paid the $10,000.00 retainer to Ballon, Stoll & Itzler. (Klein, 25 Tr. 2896-98; 8/25/76 — 9/30/76 Telecasting Operating Statement, Deft. Ex. 287, pp. 2, 3;
see
Robson, 9 Tr. 846-48; 9/29/76 Telecasting XI Transcript, Deft. Ex. 81, p. 8) On September 29, 1976, at the first meeting of creditors in the Telecasting Chapter XI, Bankruptcy Judge Roy Babitt told Mr. Robson in no uncertain terms that the retainer would be ordered to be repaid if it was not justified by an eventual fee application: “On further application the Court could at that time allocate. It can also ask that the ten thousand dollars be returned according to the same application and the order.” (Robson, 9 Tr. 874-76,11 Tr. 1112; 9/29/76 Telecasting XI Transcript, Deft. Ex. 81, p. 9) In his September 9, 1976 affidavit in support of the Ballon, Stoll & Itzler retention, Mr. Robson represented to the New York Bankruptcy Court under oath: “I am a member of the law firm of Ballon, Stoll & Itzler....” (9/9/76 Robson Ballon Stoll Retention Affidavit, para. 2, Deft. Ex. 36, p. 1) Mr. Robson repeated the representation to the New York Bankruptcy Court that he was “a member of the firm” of Ballon, Stoll & Itzler in various other affidavits and pleadings. (3/2/77 Robson Affidavit in Opposition to Motion To Quash Subpoena, para. 1, Deft. Ex. 83, p. 1; 2/28/77 Ballon Stoll Application for Leave To Apply for Ancillary Examination of George Bruns, Deft. Ex. 84, p. 3; 4/77 Stipulation and Order, Deft. Ex. 85, p. 2; 6/9/77 Robson Affidavit To Substitute the Robson Firm for Ballon Stoll, Deft. Ex. 34; Robson, 9 Tr. 857-63) In an affidavit filed in support of the plaintiff’s motion for summary judgment in this case, Mr. Robson swore that he was “a contract partner, not
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an equity partner” in Ballon, Stoll & Itzler. (3/20/86 Robson Affidavit, para. 2, Deft. Ex. 86, p. 1; Robson, 9 Tr. 864-67) Mr. Robson also testified at trial that he was “a contract or nonequity partner” and that he was “a member of the firm.” (Robson, 9 Tr. 818, 820, 868-69) In fact, Mr. Robson was “an associate of the firm” and was “not a member of the firm.” (Kaufman Dep., 16 Tr. 1703, 1704) Although he was only an associate, Mr. Robson made the decisions regarding Overmyer matters at Ballon, Stoll & Itzler. (Ressler Dep., 25 Tr. 3007) Ballon, Stoll & Itzler never filed a fee application in the Telecasting Chapter XI, and never accounted for the $10,000.00 retainer or any portion thereof. (Robson, 9 Tr. 848) The plaintiffs offered no evidence that Ballon, Stoll & Itzler ever performed any services for Telecasting.
3.4
The Scope of the Ballon, Stoll & Itzler Telecasting Retention.
The “Petition” to retain Ballon, Stoll & Itzler described the scope of the services to be rendered as follows: “to represent [Telecasting] as special counsel in connection with pending litigation with the First National Bank of Boston and more particularly at this juncture to litigate an application to vacate a stay effective against the Bank, from foreclosing its alleged security interest on the shares of the capital stock of [Telecasting].” (9/9/76 Ballon Stoll Retention “Petition,” para. 3, Deft. Ex. 35, p. 1; Robson, 10 Tr. 1009-10, 11 Tr. 1067-73) The stay referred to was the automatic stay of The Overmyer Company, Inc. (“TOC”), not the Telecasting stay. (Robson, 11 Tr. 1089, 1091) The retention “Petition” further defined the scope of services as follows: “to act as special counsel to litigate said matter
[i.e.,
the FNBB application for relief from the TOC stay] and to otherwise oversee the Chapter XI case as special counsel where said firm may be required or requested to do so as well as to participate as such on behalf of [Telecasting] in this matter and in The Overmyer Company and D.H. Overmyer Co., Inc. cases presently pending before this Court wherein Robert Herzog is the Receiver.” (9/9/76 Ballon Stoll Retention “Petition,” para. 5, Deft. Ex. 35, p. 2; Robson, 10 Tr. 1010-13) The order retaining Ballon, Stoll & Itzler as special counsel for Telecasting specified that Telecasting was “authorized and empowered to retain the law firm of Ballon, Stoll & Itzler as special counsel for services to be rendered to the debtor-in-possession in connection with a certain proceeding and litigation pending before this Court involving the First National Bank of Boston and for any other services to be rendered to the debtor-in-possession as may be required or requested by [Telecasting].” (9/10/76 Ballon Stoll Retention Order, Deft. Ex. 37, p. 1)
IV.
Third-Party Payments to the Robson Firm
4.1
The Formation of the Robson Firm.
Mr. Robson’s association with Bal-lon, Stoll & Itzler lasted only one year and three months. (Robson, 9 Tr. 818, 876-77) On June 1, 1977, because of dissatisfaction with associate salaries, Mr. Robson left Ballon, Stoll & Itzler with Leonard Toboroff and two young associates, Howard D. Ressler and Kenneth N. Miller, and together they formed the firm of Robson & Toboroff. (Robson, 9 Tr. 818, 877; Miller, 3 Tr. 291)
4.2
The Substitution of Robson & To-boroff for Ballon, Stoll & Itzler.
On June 9, 1977, Robson & Toboroff was substituted by stipulation for Ballon, Stoll & Itzler as special counsel for Telecasting in the Telecasting Chapter XI. (6/9/77 Stipulation Substituting the Robson Firm for Bal-lon Stoll, Deft. Exs. 33, 180; 6/9/77 Robson Affidavit To Substitute the Robson Firm for Ballon Stoll, Deft. Ex. 34; Robson, 10 Tr. 1003; Miller, 3 Tr. 315) The scope of the Robson Firm's retention was therefore identical to that of Ballon, Stoll
&
Itzler. (Robson, 10 Tr. 1004, Miller, 3 Tr. 315)
4.3
Work Beyond the Scope of Retention.
Mr. Robson has systematically ignored the limitations on the scope of the Robson Firm’s retention as special counsel to Telecasting.
(See
Findings 3.5, 4.2,
supra.)
Mr. Robson acknowledged that his retention was “somewhat more restrictive than all litigation.” (Robson, 10 Tr. 1006) Nonetheless, he read the scope of his reten
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tion expansively to include litigation “and other matters as required,” and to extend to “any matter at all” in the Telecasting Chapter XI. (Robson, 10 Tr. 1005, 1009,13 Tr. 1391;
see
Robson, 11 Tr. 1066-67.) By April 3, 1978, the Robson Firm was performing almost as many bankruptcy services as Finley Kumble, Telecasting’s general bankruptcy counsel. (Robson, 13 Tr. 1390;
see
Robson, 11 Tr. 1063-64, 1124.)
4.4
The Third-Party Payments.
The Robson Firm received $359,935.96 from a variety of companies controlled by Mr. Ov-ermyer, little or none of which bears any relationship to the time charge value of services performed by the Robson Firm for the company making the payments. (Robson Firm Schedule of Time Charges and Payments, Deft. Ex. 65, pp. 9, 12) These payments began the month that the Robson Firm began business and continued for six years. (Robson Firm Schedule of Time Charges and Payments, Deft. Ex. 65, pp. 1-7; Robson, Miller & Osserman Second Amended Interrogatory Answers, Ex. A, Deft. Ex. 23, pp. 8-17) For example, the Robson Firm received $100,000.00 from Peerless Manufacturing Corporation against only $2,405.00 of total time charge values. (Robson Firm Schedule of Time Charges and Payments, Deft. Ex. 65, p. 10; Robson, 13 Tr. 1301) Although Mr. Robson claimed that the Robson Firm had additional unrecorded time charges, he admitted that there was a large disparity between the amount received and the amount of time spent. (Robson, 13 Tr. 1301;
see
Miller, 27 Tr. 3383-90, 3392-96) A purported calculation of this unrecorded time was left behind in New York when Mr. Robson and Mr. Miller came to Cleveland to testify. (Robson, 18 Tr. 2095, Miller, 27 Tr. 3392-93) The Robson Firm received $69,000.00 of the $100,000.00 from Peerless Manufacturing Corporation after Mr. Robson began consulting with Mr. Overmyer about filing a Chapter XI petition for that company. (Robson, 13 Tr. 1293-96; Robson Firm Peerless Time Charges, 5/19/78 Robson Entry, Deft. Ex. 68, p. 1) Mr. Robson admitted that payments received by the Robson Firm from Spectrum Development Company, Peerless Manufacturing Corporation, R.T. Systems, Inc., AGG Projects, Inc., Jeebs Distribution Services, Inc., Omega Executive Services, Inc., Morton Telecasting, Inc., General Real Estate Funding Corp., Jacques A. Mitchell Realty Corp. and A.T. Houlihan, Inc., all Overmyer-con-trolled companies, were retainers for work performed for Mr. Overmyer and his companies in general. (Robson, 8 Tr. 730-34, 13 Tr. 1304-08;
cf
Robson Louisville Testimony, 16 Tr. 1789) At least $12,500.00 of payments by R.T. Systems was applied against invoices rendered by the Robson Firm to Peerless Manufacturing Corporation. (Klein, 25 Tr. 2905) The Robson Firm billed all its disbursements, including disbursements incurred in the Telecasting Chapter XI and disbursements incurred in the Warehouse Chapter XI of D.H. Over-myer Co., Inc. (“DHO Co.” or “the Consolidated Debtors”), to Peerless Manufacturing Corporation. (3/1/78 Robson Firm Bill to Peerless, Deft. Ex. 170, pp. 2-4; Robson, 22 Tr. 2578-85; Robson New York Dep., 17 Tr. 1832-39) On one occasion these Chapter XI disbursements were paid out of funds removed by Mr. Overmyer from Telecasting by means of a Telecasting check to Hadar Leasing International Co., Inc. (“Hadar”), followed by a Hadar check to AGG Projects, Inc., followed by a check of AGG Projects, Inc. to the Robson Firm, drawn on an AGG account that was never recorded on the AGG books. (Klein, 25 Tr. 2900-05; 4/19/78 $10,000 AGG Check to Robson & Toboroff, Deft. Ex. 288; 4/18/78 Connery Memo to Overmyer with Handwritten Notations of Connery and Overmyer, Deft. Ex. 170, p. 1; Raible, 23 Tr. 2742-45)
See Hadar Decision,
23 B.R. at 871-73 , Finding 22 on the Matching Checks Scheme.
4.5
Third-Party Payments To Other Attorneys for Chapter XI and Chapter 11 Work.
Mr. Overmyer paid $5,000.00 out of Omega Executive Services, Inc. to Wisehart, Friou & Koch for representing the creditors’ committee in the Hadar Chapter 11 in New York, before the case was transferred to Cleveland. (Carrieri, 3 Tr. 269-72; Raible, 23 Tr. 2719-22; 4/16/81 $2,500 Omega Request for Payment to Wisehart, Friou & Koch, Deft. Ex. 29; 4/16/81 $2,500
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Omega Check to Wisehart, Friou & Koch, Deft. Ex. 32; 5/1/81 $2,500 Omega Request for Payment to Wisehart, Friou & Koch, Deft. Ex. 30; 5/1/81 $2,500 Omega Check to Wisehart, Friou & Koch, Deft. Ex. 31) Mr. Overmyer paid approximately $30,000.00 out of R.T. Systems, Inc. and its subsidiaries to Harry Margolis, attorney for the creditors’ committee in the Warehouse Chapter XI. (Raible, 23 Tr. 2693-95, 2718; 3/13/81 $1,000 TOFC Checks to Mar-golis, Deft. Ex. 281) Mr. Margolis did nothing for R.T. Systems, Inc. and its subsidiaries except to make a single one-day trip to Chicago. (Raible, 23 Tr. 2707-08) Mr. Ov-ermyer also entered into an agreement with Mr. Margolis to pay him an additional $75,000.00 out of Antares International Corporation, an Overmyer company. (Rai-ble, 23 Tr. 2713-17; 9/25/79 Antares Letter to Margolis with Connery and Over-myer Handwritten Notes on Drafts, Deft. Ex. 284) Mr. Margolis, who had never turned the money in to his firm, was required personally to return the $30,000.00 to DHO Co. (Raible, 23 Tr. 2718)
4.6
The Robson-Overmyer Retainer Agreement.
Early in the existence of the Robson Firm, Mr. Robson entered into an oral agreement with Mr. Overmyer that Mr. Overmyer would pay to the Robson Firm a retainer, initially of $5,000.00 per month and later of $10,000.00 per month, from any non-Chapter XI Overmyer company for all work being done by the Robson Firm for Mr. Overmyer or any Overmyer company, including the Chapter XI debtors, DHO Co. and Telecasting. (Ressler New York Dep., 25 Tr. 2978-79, 2981-86; Res-sler Dep., 25 Tr. 2990-94, 3003-07) Mr. Ressler’s description of the agreement is completely credible: Mr. Ressler, then a young associate without the supervision of a senior bankruptcy attorney (Robson, 9 Tr. 841, 878, 10 Tr. 988-89, 11 Tr. 1069, 1089, 14 Tr. 1454, Robson New York Dep., 17 Tr. 1823), thought at the time it was proper to receive third-party payments for Chapter XI work without disclosure to the bankruptcy court. (Ressler Dep., 25 Tr. 3001-03) As late as September 3, 1982, Mr. Robson wrote a letter to Mr. Connery, Mr. Overmyer’s house counsel, giving his opinion that DHO Co. could retain an accountant and pay him out of third-party sources without application to the bankruptcy court for his retention or disclosure to the bankruptcy court of the third-party payments. (Robson, 18 Tr. 2024-35; 9/3/82 Robson Opinion Letter to Connery, Deft. Ex. 195) At Mr. Overmyer’s criminal trial in Louisville, Kentucky, Mr. Robson testified that the retainer agreement was entered into in late 1977 or early 1978, after Mr. Overmyer acquired Peerless Manufacturing Corporation (Robson, Louisville Testimony, 16 Tr. 1789-91), and described the agreement in such a way as to imply that the Peerless retainer payments were intended for Peerless work only (Robson Louisville Testimony, 16 Tr. 1789-99, 1812-15). Mr. Robson also testified in Louisville that Peerless Manufacturing Corporation was the only Overmyer retainer (Robson Louisville Testimony, 16 Tr. 1789) and that “[p]rior to that, most of my work was with respect to corporations that were Chapter XI debtors in which I was retained as special counsel and you cannot get a retainer from a Chapter XI debtor” (Robson Louisville Transcript, 16 Tr. 1790). At trial, Mr. Robson and Mr. Miller both testified that the Over-myer retainer was limited to non-Chapter XI work. (Robson, 13 Tr. 1266-68; Miller, 6 Tr. 597-98, 7 Tr. 658-59, 693-95) This story was contrived after the creditors’ committee and the custodial receiver in the Warehouse Chapter XI attacked the Robson Firm’s fees on the ground of the failure to disclose the third-party payments. (Robson, 13 Tr. 1288-89; Robson New York Dep., 17 Tr. 1819-25, 1840-41, 1844-48,1852-53) Mr. Robson testified in a deposition in connection with the Robson Firm’s Warehouse Chapter XI fee application that his brother, Eugene Robson, who was then deceased, was one of the people who knew about the arrangement. (Robson New York Dep., 17 Tr. 1824, 1852-53; Robson, 13 Tr. 1320-22; Miller, 8 Tr. 756-57) The clearest proof that the limitation of the retainer to non-Chapter XI work is a recent contrivance is that there would be no reason for either Mr. Overmyer or Mr. Robson to have specified such a limitation, given the facts (a) that Mr. Overmyer had no
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compunctions about making third-party-payments for Chapter XI work
(see
Finding 4.5,
supra)
and (b) that Mr. Robson was unaware of any restrictions on third-party payments for Chapter XI work at least as late as September 3, 1982 (Robson, 18 Tr. 2024-35; 9/3/82 Robson Opinion Letter to Connery, Deft. Ex. 195). The Robson Firm never disclosed the Robson-Overmyer retainer agreement to the bankruptcy court prior to the New York fee litigation. (Robson, 13 Tr. 1289;
cf.
Robson, Miller & Os-serman Final DHO Co. Fee Application, Deft. Ex. 265 [containing no mention of third-party payments]) The $359,935.96 received by the Robson Firm from third-party Overmyer sources was intended as compensation for both non-Chapter XI work and Chapter XI work, including work done for Telecasting.
V.
Robson Firm Conflicts
5.1
Removal of the Operating Receiver.
On January 11, 1977, District Judge Dudley B. Bonsai entered an order removing Robert P. Herzog, Esquire, as operating receiver of DHO Co. and returning the debtor to possession. (Warehouse XI Docket, 1/18/77 Entry, Deft. Ex. 318, p. 2) Mr. Robson represented DHO Co., as debt- or, not debtor-in-possession, in obtaining the order removing the operating receiver and restoring Mr. Overmyer to control of DHO Co. (Robson, 9 Tr. 902, 10 Tr. 1013; 11/11/86 Order to Show Cause to Remove Receiver and Restore Debtors to Possession, Deft. Ex. 183;
see
Robson, 13 Tr. 1398-99)
5.2
The “Retention” of the Robson Firm as Special Counsel to DHO Co.
On June 6, 1977, a stipulation was filed in the Warehouse Chapter XI, substituting the Robson Firm for Ballon, Stoll & Itzler as special counsel to DHO Co. (6/6/77 Warehouse XI Stipulation Substituting the Robson Firm for Ballon Stoll, Deft. Exs. 96, 194; Robson, 11 Tr. 1042-43, 1046-50) Bal-lon, Stoll
&
Itzler, however, had never been retained as special counsel to DHO Co. (Robson, 11 Tr. 1026-27, 1045; Robson New York Fee Trial Testimony, 17 Tr. 1928-29, 1934, 1937-38, 1943-44;
see
4/11/77 Warehouse XI Transcript of Hearing Re Accusations, Deft. Ex. 177, pp. 37-38, 43) The Robson Firm never filed a separate application for retention as DHO Co. special counsel. (Robson, 11 Tr. 1050; Robson New York Fee Trial Testimony, 17 Tr. 1951) The Robson Firm was therefore never properly retained as special counsel for DHO Co.
5.3Spectrum Development Company.
One of the matters that the operating receiver was questioning was the relationship between DHO Co. and Spectrum Development Company, Inc. (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 40, 44-48, 50, 51, 58, 61-64, 81, 84, 26 Tr. 3106, 3112-16, 3118, 3120, 3126, 3130-34, 3151-52, 3155) Spectrum was a company controlled by Mr. Overmyer through a holding company, Total Development Company, Inc. (Miller, 6 Tr. 596; Robson, 9 Tr. 906-09; Raíble, 23 Tr. 2723; Robson New York Fee Trial Testimony, 17 Tr. 1969) Ninety percent of Total was owned by an Overmyer family trust, and Total, in turn, owned 80 percent of Spectrum. (5/12/80 Robson Letter to Bright, Deft. Ex. 190, p. 2; Robson New York Fee Trial Testimony, 17 Tr. 1970-71;
cf.
Robson, 9 Tr. 903-04) Prior to the filing of the Warehouse Chapter XI, Spectrum used approximately $26,000.00 of DHO Co. funds, plus borrowed funds, to construct a warehouse in New Jersey. (5/12/80 Robson Letter to Bright, Deft. Ex. 190, p. 3; 1973 DHO Co. Checks to Spectrum Totalling $26,000, Deft. Ex. 191, pp. 2-6;
see
Robson,
§
Tr. 903, 908-09) Spectrum leased the warehouse to DHO Co. for $125,000.00 per year. (6/28/77 Application to Cancel Spectrum Lease, para. 8, Deft. Ex. 186, third page) On March 1, 1977, after the removal of the operating receiver, DHO Co. leased the warehouse back to Spectrum for five years for $149,-000.00 per year plus 50 percent of gross revenues in excess of $264,000.00 per year. (6/28/77 Application To Cancel Spectrum Lease, para. 10, Deft. Ex. 186, third page; 5/12/80 Robson Letter to Bright, Deft. Ex. 190, p. 3) As part of the refinancing of the warehouse, the Robson Firm filed an “Application” to terminate the master lease from Spectrum to DHO Co. in exchange for a payment of $25,000.00, barely more than
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one year’s base rent under the sublease. (6/28/77 Application to Cancel Spectrum Lease, Deft. Ex. 186, second through fifth pages; 5/12/80 Robson Letter to Bright, Deft. Ex. 190, p. 3; Robson, 9 Tr. 909) Mr. Overmyer subsequently sold his interest in Spectrum for $200,000.00. (Raible, 23 Tr. 2722-24;
cf.
Robson, 9 Tr. 910) When the DHO Co. sale of the Spectrum lease was investigated by the custodial receiver of DHO Co., Mr. Robson represented to the custodial receiver that Total was owned by a family trust over which Mr. Overmyer had no control. (Robson New York Fee Trial Testimony, 17 Tr. 1970; 5/12/80 Robson Letter to Bright, Deft. Ex. 190, p. 2) At the trial on the Robson Firm’s fee application in the Warehouse Chapter XI in January, 1986, Mr. Robson admitted that “Dan Overmyer ran everything, even though it was owned by trusts that he had no control over. He operated as a consultant for all of these companies, and in that form, basically ran the daily operations.” (Robson New York Fee Trial Testimony, 17 Tr. 1971) Mr. Robson admitted at the trial of this case that he represented both Spectrum and DHO Co., as well as Mr. Over-myer, in seeking bankruptcy court approval of Spectrum’s purchase of the interest of DHO Co. in the New Jersey warehouse. (Robson, 9 Tr. 909-10; Robson Firm Spectrum Time Slips, Deft. Ex. 187) At the time of the “Application” to sell the interest of DHO Co. to Spectrum, both the Robson Firm and Ballon, Stoll & Itzler were receiving payments from Spectrum Development Company. (Robson, 9 Tr. 907-08; Miller, 6 Tr. 596; Robson, Miller & Osserman Second Amended Interrogatory Answers, Exhibit A, Deft. Ex. 23, p. 8; Kaufman Dep., 16 Tr. 1705-06; Klein, 25 Tr. 2896) Neither in the Spectrum “Application” nor in any of his DHO Co. fee applications did Mr. Robson disclose to the New York Bankruptcy Court either the payments from Spectrum or his dual representation of Spectrum and DHO Co. (Robson New York Fee Trial Testimony, 17 Tr. 1954-59, 1974) Mr. Robson himself has characterized the conflict of interest involved in representing both DHO Co. and Spectrum as “inconceivable.” (Robson New York Fee Trial Testimony, 17 Tr. 1954-57)
5.4
The Herzog Proof of Claim Against Telecasting.
On December 3, 1976, Mr. Herzog filed a $4,400,000.00 proof of claim on behalf of DHO Co. against Telecasting. (12/3/76 Herzog Proof of Claim, Deft. Ex. 181; Robson, 11 Tr. 1116; Robson New York Fee Trial Testimony, 17 Tr. 1884) One month after the proof of claim was filed, Mr. Herzog was removed as receiver. (Warehouse XI Docket, 1/18/77 Entry, Deft. Ex. 318, p. 2) For the next year and a half, the proof of claim languished.
{See
4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 36-38, 26 Tr. 3101-03)
5.5
The Adjudication of DHO Co.
On March 29, 1978, Mr. Robson filed a motion to recuse Judge Babitt. (Robson, 11 Tr. 1130-32; Ressler Dep., 25 Tr. 3015; 3/29/78 Notice of Motion for Recusation, paras. 7-8, Deft. Ex. 320, third page) At a hearing held on April 6, 1978, Edgar H. Booth, Esquire, counsel for the operating receiver, moved to adjudicate DHO Co. (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, p. 49, 26 Tr. 3117) The grounds alleged for adjudication were,
inter alia,
the Spectrum sellout (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 40, 44-48, 58, 26 Tr. 3106, 3112-16, 3126), the failure to prosecute the Herzog proof of claim (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 36-38, 26 Tr. 3101-03) and the fraudulent conveyance of the Canadian warehouse companies to Mr. Overmyer (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 38-40, 26 Tr. 3103-05), a claim that FNBB later prosecuted successfully in this Court,
Hadar Decision,
23 B.R. at 847-48 , Finding 12.1. Judge Babitt allowed the motion to adjudicate on the ground that no plan could possibly be confirmed in the face of these serious charges. (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 78, 48, 52-53, 55, 59, 67-76, 81-83, 26 Tr. 3149, 3116, 3121, 3123-24, 3128, 3136-46, 3152-54; 4/7/78 Order of Adjudication and Appointment of Trustee, Deft. Ex. 321) He appointed former District Judge Harold R. Tyler, Jr., trustee pending appeal. (4/6/78 Warehouse XI Transcript,
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Deft. Ex. 319, pp. 89-93, 26 Tr. 3161-65; 4/7/78 Order Granting Stay Pending Appeal, Deft. Ex. 322) At Mr. Robson’s request, pending appeal, Judge Babitt left Mr. Overmyer in possession (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 91-92, 26 Tr. 3163-64) subject to the supervision of Mr. Tyler as custodial receiver (4/7/78 Order Granting Stay Pending Appeal, Deft. Ex. 322). Judge Babitt also denied the motion to recuse. (4/6/78 Warehouse XI Transcript, Deft. Ex. 319, pp. 96-97, 26 Tr. 3169; 4/6/78 Memo Endorsement, Deft. Ex. 320, sixth page) On May 23, 1978, District Judge Lloyd F. MacMahon affirmed Judge Babitt’s order denying the motion to recuse, but vacated the order of adjudication on the ground of insufficient notice and lack of an adequate record and findings, and remanded for further proceedings before a different bankruptcy judge to be selected by lot. (5/23/78 Memorandum of Opinion, Deft. Ex. 323, pp. 2, 7-9) Mr. Tyler continued as custodial receiver. (5/23/78 Memorandum of Opinion, Deft. Ex. 323, p. 9;
see
9/11/78 Order Delineating Responsibilities of Custodial Receiver, Deft. Ex. 324) The case was redrawn to Bankruptcy Judge Joel Lewittes. (Warehouse XI Docket, 7/21/78 Entry, Deft. Ex. 318, p. 4)
5.6
The Guzzetta Retention.
One of the matters for which Ballon, Stoll & Itzler had been retained as special counsel for Telecasting encompassed the defense of the proof of claim filed by Mr. Herzog as operating receiver.
(See
9/9/76 Ballon Stoll Retention “Petition,” para. 5, Deft. Ex. 35, p. 2) After he assumed the position of special counsel to DHO Co.
(see
Finding 5.2, supra), Mr. Robson also assumed the representation of DHO Co. in prosecuting the Herzog claim, and represented Telecasting in defending the claim. (Robson, 11 Tr. 1063-64, 1114-25; Miller, 4 Tr. 394-95) One of Mr. Tyler’s first acts as custodial receiver was to object on May 4, 1978 to the serious conflict of interest involved in this dual representation. (Robson, 11 Tr. 1116-17;
see
Robson Firm Telecasting Time Slips, Robson 5/5/78 Entry, Deft. Ex. 40, p. 62) As a result, the Robson Firm withdrew from representing both Telecasting and DHO Co., and secured the retention of John Guzzetta, Esquire, as special counsel to represent Telecasting. (Miller, 4 Tr. 394-95; Robson, 11 Tr. 1123, 1126-27; 5/22/78 Guzzetta Retention Application, Deft. Ex. 100) At the trial of this adversary proceeding, Mr. Robson claimed that his representation of both parties in a litigated matter between two Chapter XI debtors was a “technical problem” arising from the fact that “nobody treated these companies as separate entities.” (Robson, 11 Tr. 1125) Mr. Robson explained his approach to representing both sides as follows: “since the companies were affiliated companies, and since they were both now under the control of the same people, it was my intention and understanding that Judge Babitt would be presented with both sides of the case with all the documentary evidence so that he could make a determination. I didn’t consider it a dispute in the same sense that I would if an outside party had come in. The books were handled for both companies by the same people. The same witnesses would have had to testify for the warehouse company as would testify for Telecasting, since they were the ones who had made the entries.... I would have presented the court with all of the facts so that the court could make an independent determination.” (Robson, 11 Tr. 1127-28) Mr. Robson’s disregard of such an egregious conflict of interest is explained by the fact that his only real client was Daniel Harrison Overmyer.
(See
Robson Pro Haec Vice Testimony, 16 Tr. 1714-15)
5.7
The Omega v. Grant and DHO Co. v. Talcott Settlement.
Mr. Robson represented DHO Co. in an action against James Talcott, Inc. (Robson, 13 Tr. 1312) Mr. Robson also represented Omega Executive Services, Inc., an Overmyer company in an action against the owners of Talcott,
Omega Executive Services, Inc. v. Grant.
(Robson, 13 Tr. 1309, 1313) The two cases were settled simultaneously. (Robson, 13 Tr. 1311; 12/1/80 $34,550.00 Omega v. Grant Settlement Check, Deft. Ex. 79, 12/1/80 $70,000.00 DHO Co. v. Talcott Settlement Check, Deft. Ex. 117) Mr. Robson received a contingent fee out of the
Omega
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v. Grant
settlement, whereas his compensation for representing DHO Co. would be subject to allowance by the New York Bankruptcy Court whenever the Warehouse Chapter XI was over. (Robson, 13 Tr. 1309-14; Robson, Miller
&
Osserman Second Amended Interrogatory Answers, Exhibit A, Deft. Ex. 23, p. 13; Robson Firm Schedule of Time Charges and Payments, Deft. Ex. 65, p. 10) He was unable to explain how the allocation of the settlement between Omega and DHO Co. was arrived at. (Robson, 13 Tr. 1311)
5.8
Fidelity & Deposit.
On May 3, 1977, the United States Court of Appeals for the Second Circuit affirmed the District Court’s refusal to enjoin the collection of a judgment entered in 1974 against Mr. and Mrs. Overmyer: “This appeal reveals a crass misuse of both the state and federal judicial systems to avoid the payment of a judgment.”
Overmyer v. Fidelity & Deposit Co. of Maryland,
554 F.2d 539, 540 (2d Cir.1977)
(Fidelity & Deposit Decision,
Deft. Ex. 42). Mr. Robson and Mr. Overmyer were not deterred; they found new ways to prolong the litigation.
(See
Robson, 10 Tr. 980-83) Mr. Robson immediately began efforts to take Bankruptcy Rule 205 examinations of Fidelity & Deposit in both the Telecasting Chapter XI and the Warehouse Chapter XI, even though Fidelity & Deposit was not a creditor in either case. (Miller, 4 Tr. 352-53, 355, 363-64; Robson, Miller & Osserman Supplemental Interrogatory Answers, Deft. Ex. 25, p. 2;
cf.
Robson, 10 Tr. 914-15) When this tactic failed, Mr. Overmyer asked Mr. Robson to file yet another motion to vacate the judgment on the ground of “fraud upon the court.” (12/1/77 Connery Letter to Robson, Deft. Ex. 47) Work by the Robson Firm on the motion was charged to Telecasting. (Miller, 4 Tr. 381-82, 387-91; Robson, 9 Tr. 837; Robson, Miller & Osserman Supplemental Interrogatory Answers, Miller 12/6/77 Entry, Deft. Ex. 25, p. 4; Robson Firm Telecasting Time Slips, Deft. Ex. 40, p. 32;
cf.
Robson, 10 Tr. 929-30) The Robson Firm commenced a new civil action in the New York Supreme Court, which is a trial court in the New York judicial system, asking that the judgment be set aside, alleging that Mr. and Mrs. Overmyer had incurred $200,000.00 of counsel fees and expenses in contesting the $25,535.85 judgment and seeking judgment for $200,000.00 in compensatory damages, $600,000.00 in punitive damages and attorneys’ fees. (12/16/77 Verified Complaint Against Fidelity & Deposit, paras. 18, 30, prayers a, b, c, d, Deft. Ex. 49, pp. 4-5, 6, 7-8; 12/16/77 Verification of Complaint Against Fidelity
&
Deposit, Deft. Ex. 50; 12/16/77 Summons to Fidelity & Deposit, Deft. Ex. 87; Robson, 10 Tr. 957, 965-71; Miller, 4 Tr. 379-82;
see
12/15/77 Ressler Letter to Connery, Deft. Ex. 48) On January 23, 1978, Mr. and Mrs. Overmyer posted a $50,-000.00 bond to stay the enforcement of the Fidelity & Deposit judgment. (1/23/78 Bond to Fidelity
&
Deposit, Deft. Ex. 88,
see
1/24/78 Connery Letter to Uptegrove, Deft. Ex. 90; 1/23/78 $50,000.00 Hadar Certified Check to Fireman’s Fund Insurance Co., Deft. Ex. 89)
See Hadar Decision,
23 B.R. 879 -80, Finding 24.1. On February 1, 1978, immediately after commencing the action, and knowing that there was “no legal procedure available” to modify the
Fidelity & Deposit Decision
of the Second Circuit, Mr. Robson drafted a letter for Mr. Overmyer to send to Judge Mulligan, who wrote the opinion, asking him to modify the language of that opinion criticizing Mr. Overmyer and his attorneys. (Miller, 4 Tr. 357, 370-71; 2/6/78 Overmyer letter to Judge Mulligan, Deft. Ex. 45; 2/1/78 Robson Draft of Overmyer Letter to Judge Mulligan, Deft. Ex. 44;
see
Robson, 9 Tr. 838-39) In contrast to the complaint that Mr. Robson had just served and Mr. Overmyer had sworn to be true, which alleged that Mr. and Mrs. Overmyer had “incurred the sum of $200,000.00 as and for counsel fees and other expenses” (12/16/77 Verified Complaint Against Fidelity & Deposit, para. 30, Deft. Ex. 49, p. 6; 12/16/77 Verification, Deft. Ex. 50), the letter stated that Mr. Overmyer had “probably spent more money trying to correct what I believe to be an injustice than it would have cost me to satisfy the [$25,000] judgment” (2/6/78 Overmyer Letter to Judge Mulligan, Deft. Ex. 45, p. 3; 2/1/78 Robson Draft of Overmyer Letter to Judge
*141
Mulligan, Deft. Ex. 44, p. 5). After the Robson Firm lost the case in the New York Supreme Court, Mr. Connery wrote to the Robson Firm on May 19, 1978: “Dan still wants a rehearing
and
appeal. Please write Firemans Fund not to pay on bond as you are appealing.” (5/19/78 Connery Memo to Ressler, Deft. Ex. 92 [emphasis in original]) Mr. Robson attempted to meet with Judge Mulligan to urge again the modification of the
Fidelity & Deposit Decision,
and, when he was unsuccessful, sent his own letter to Judge Mulligan on January 22, 1979, reciting facts that were not in the record, urging Judge Mulligan to modify the opinion and requesting a personal meeting, but not copying opposing counsel. (1/22/79 Robson Letter to Judge Mulligan, Deft. Ex. 46; Robson, 10 Tr. 918-20, 922-23, 924) After the Robson Firm lost the appeal to the Appellate Division, counsel for Fidelity & Deposit wrote to the Robson Firm requesting that Mr. and Mrs. Overmyer and Fireman’s Fund Insurance Company honor their obligations on the bond. (5/16/79 Lambert Letter to Robson & Toboroff, Deft. Ex. 91) On May 22, 1979, Fidelity & Deposit made demand on Fireman’s Fund Insurance Company to pay the judgment, and asserted that “[u]nless we hear from you within the next ten (10) days, we shall have no alternative but to refer this matter to our attorneys to institute the appropriate proceedings to seek to recover on the aforementioned bonds.” (5/22/79 Shifman Letter to Fireman’s Fund Insurance Company, Deft. Ex. 93, p. 2) On June 12, 1979, Mr. Connery wrote to Fireman’s Fund Insurance Company stating that he was going to discuss with the Robson Firm the possibility of taking a “further appeal.” (6/12/79 Connery Letter to Mastrocola, Deft. Ex. 95) At the same time, Mr. Connery sent a memo to the Robson Firm: “I am attempting to have the Internal Revenue Service attach the cash deposit behind the bond. Dan would like Easton
&
Echtman to bring an action on behalf of Shirley [Mrs. Overmyer] against Fidelity & Deposit for harassment and attach the bond. Is there anything further we can do to delay payment on this bond?” (6/12/79 Connery Memo to Ressler, Deft. Ex. 94) The answer to this question will never be known: “The only recollection I have of Fidelity & Deposit is handling a supplementary proceeding for Mr. Overmyer and appearing or having some proceedings in the Bankruptcy Court with reference to a motion to quash. I don’t remember anything else, and that’s all I can tell you. I have no recollection of this case.” (Robson, 10 Tr. 981) The delay tactics of the Robson Firm are reprehensible, quite aside from the fact that they were employed in the face of the admonition of the Second Circuit in the
Fidelity & Deposit Decision:
“It has not escaped our attention that appellants were assisted by counsel before both the district court and this court in bringing this sham suit and appeal.... The use of this court solely as a dilatory tactic to avoid paying a judgment is a serious breach of professional ethics. We remind the Bar that under Fed.R.Civ.P. 11 the signature of an attorney on a pleading ‘constitutes a certificate by him ... that it is not interposed for delay.’ We will not countenance attempts to pervert the federal judicial process into a Dickensian court where lawsuits never end.”
(Fidelity & Deposit Decision,
554 F.2d at 543 n. 4, Deft. Ex. 42 [citations omitted])
5.9
LocaFrance.
Interstate Distribution Services, Inc. (“IDS”), a company controlled by Mr. Overmyer, leased space from DHO Co. at the Cincinnati and Toledo warehouses, in which it operated a public warehousing business. (Robson, 14 Tr. 1474-75, 1503; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 64; 10/21/80 LocaFrance Ohio Common Pleas Decision, Deft. Ex. 137, p. 1) Mr. Robson undertook to represent IDS in an adversary proceeding brought against it by Mr. Herzog as operating receiver of DHO Co. (12/10/76 Stipulation Substituting Ballon Stoll for Alex Rosen as IDS Counsel, Deft. Ex. 185; 11/19/76 Adams Retainer Letter to Robson, Deft. Ex. 182) After Mr. Herzog was removed as receiver
(see
Finding 5.1,
supra)
and Mr. Robson usurped the position of special counsel to DHO Co.
(see
Finding 5.2,
supra),
Mr. Robson undertook to represent both parties to the litigation. (Robson New York Fee Trial
*142
Testimony, 17 Tr. 1954-56) Mr. Robson never disclosed to the New York Bankruptcy Court either the dual representation or his receipt of compensation from IDS. (Robson New York Fee Trial Testimony, 17 Tr. 1950-51, 1957-59) The conflict was brought to the attention of Judge Babitt on April 11, 1977 (4/11/77 Warehouse XI Transcript of Hearing Re Accusations, Deft. Ex. 177, pp. 37-38), with the result that he ordered Mr. Robson in no uncertain terms to cease his dual representation (4/11/77 Warehouse XI Transcript of Hearing Re Accusations, Deft. Ex. 177, pp. 41-43). “This is a most [e]gregious conflict, most outrageous imposition.” (4/11/77 Warehouse XI Transcript of Hearing Re Accusations, Deft. Ex. 177, p. 42) Interstate defaulted on $180,919.00 of rent due to DHO Co. (8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 65) LocaFrance United States Corporation obtained judgments against IDS of $9,922.34 and $30,267.12. (10/21/80 LocaFrance Ohio Common Pleas Decision, Deft. Ex. 137, p. 1;
see
Robson, 14 Tr. 1476-77) When LocaFrance sought to garnish the accounts receivable of IDS to satisfy these judgments, Mr. Overmyer transferred all the accounts and business of IDS to two newly formed Overmyer companies, MidAmerican Warehouse Company and Express Warehouse and Distribution Company. (10/21/80 LocaFrance Ohio Common Pleas Decision, Deft. Ex. 137, pp. 1-2;
see
Robson, 14 Tr. 1477-79) LocaFrance then sued Mid-American and Express, as well as IDS, seeking to follow the fraudulently conveyed accounts and to recover punitive damages and attorneys fees for the fraudulent conveyance. (10/21/80 LocaFrance Ohio Common Pleas Decision, Deft. Ex. 137) Trial was scheduled for March 3,1980. (2/26/80 Robson Letter to Royer, Deft. Ex. 141) On February 22, 1980, Mr. Robson, as “special counsel” for DHO Co., was asked to comment on security agreements held by DHO Co. in the accounts receivable of Mid-American and Express. (2/22/80 Connery Letter to Robson, Deft. Ex. 142) On February 26,1980, without disclosure to the New York Bankruptcy Court, Mr. Robson undertook to assist in representing Mid-American and Express in the defense of the LocaFrance action. (2/26/80 Robson Letter to Royer, Deft. Ex. 141; Robson, 14 Tr. 1503, 1504,1513-14; Robson New York Fee Trial Testimony, 17 Tr. 1978-79) On February 29, 1980, the Robson Firm obtained an
ex parte
order from the New York Bankruptcy Court that permitted DHO Co. to conduct a public warehousing business in the premises leased to Mid-American. (Robson, 14 Tr. 1505; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 65; 2/28/80 Robson Firm Time Slip, Deft. Ex. 139; 2/29/80 Robson Firm Time Slip, Deft. Ex. 140) In March, 1980, DHO Co. terminated the lease to Mid-American. (8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 65) Mid-American owed DHO Co. $163,-625.00 in unpaid rent at the time the lease was terminated. (Robson, 14 Tr. 1486-87; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 65) On October 21, 1980, the Lucas County Court of Common Pleas entered judgment in favor of LocaFrance against IDS, Mid-American and Express for $60,000.00 in punitive damages and $22,865.75 in attorneys fees (in addition to the underlying $40,000.00 of judgments) for the deliberate fraudulent conveyance from IDS to Mid-American and Express. (10/21/80 LocaFrance Ohio Common Pleas Decision, Deft. Ex. 137, p. 6; 8/4/82 Robson
&
Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 66;
see
Robson 14 Tr. 1528-29) When LocaFrance learned that the warehouse operations had been fraudulently conveyed to DHO Co., LocaFrance moved in the Lucas County Court of Common Pleas to garnish the accounts that were now in the possession of DHO Co. (Robson, 14 Tr. 1530; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 66) Mr. Robson then commenced an adversary proceeding by DHO Co. against LocaFrance in the New York Bankruptcy Court, seeking to enjoin the garnishment on the basis of an alleged violation of the DHO Co. automatic stay, even though the LocaFrance action against DHO Co. was clearly a post-petition cause of action. (Robson, 14 Tr. 1530; 8/4/82 Robson & Miller Interim DHO Co.
*143
Fee Application, Deft. Ex. 138, p. 67)
See
28 U.S.C. § 959 (a). LocaFrance was forced to go to New York to defend this unwarranted adversary proceeding. (Robson, 14 Tr. 1530-31) On July 2,1981, the New York Bankruptcy Court declined to exercise jurisdiction and directed that DHO Co. proceed with the litigation in Ohio. (Robson, 14 Tr. 1531; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, pp. 67-68; 7/2/81 Lewittes Memorandum Endorsed, Deft. Ex. 192) Bankruptcy Judge Lewittes and District Judge Sweet each denied a stay pending appeal. (8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, pp. 68-69) The Robson Firm then undertook to defend DHO Co. in the action in the Lucas County Court of Common Pleas. (Robson, 14 Tr. 1532) On August 13, 1981, garnishment orders were entered against DHO Co. in the Court of Common Pleas, allowing the collection of the $60,000.00 in punitive damages and the $22,865.75 in attorneys fees. (Robson, 14 Tr. 1532; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, pp. 69-70) Mr. Robson again sought a stay pending the appeal of Judge Lewittes’s decision, and on August 24, 1980, District Judge Owen denied a stay. (Robson New York Fee Trial Testimony, 17 Tr. 1984; 8/24/81 Owen Endorsement Memorandum, Deft. Ex. 193; 8/4/82 Robson
&
Miller Interim DHO Co. Fee Application, Deft. Ex. 138, pp. 70-71) Funds of DHO Co were used to collateralize an appeal bond. (Robson, 14 Tr. 1533; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 71) On June 25, 1982, the Ohio Court of Appeals affirmed the judgment as to punitive damages and attorneys fees, and added an additional 10 percent penalty to the underlying judgment for taking a frivolous appeal. (6/25/82 LocaFrance Ohio Court of Appeals Decision, Deft. Ex. 75, pp. 5-6; Robson, 14 Tr. 1533-34; Robson New York Fee Trial Testimony, 17 Tr. 1991-92; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 71) LocaF-rance collected approximately $100,000.00 on the judgment out of the assets of DHO Co. (Robson, 14 Tr. 1534-35; Robson New York Fee Trial Testimony, 17 Tr. 1979) DHO Co. lost approximately $485,000.00 in its dealings with Mr. Overmyer’s three companies — $180,919.00 in unpaid rent by IDS, $163,625.00 in unpaid rent by MidAmerican, the $40,000.00 underlying LocaFrance judgments and $100,000.00 in punitive damages, attorneys fees, penalty and interest. (Robson, 14 Tr. 1533-39) Mr. Robson, in his usurped capacity as DHO Co. special counsel, took no steps to recoup the DHO Co. losses either from IDS, MidAmerican and Express or from Mr. Overmyer (Robson, 14 Tr. 1487), despite the fact that he was holding $250,000.00 of purported Overmyer funds in the Robson Trust
(see
Finding 9.8,
infra).
Instead, he applied to the DHO Co. estate for compensation for 333.9 hours of work on the LocaFrance case. (Robson, 14 Tr. 1542-43; 8/4/82 Robson & Miller Interim DHO Co. Fee Application, Deft. Ex. 138, p. 72)
5.10
Concealment of the Robson Firm’s Conflicts.
The extent of the Robson Firm’s conflicts remained concealed until 1986, because the Robson Firm refused to disclose its time records at a 1982 fee hearing in the Warehouse Chapter XI and Bankruptcy Judge Lewittes refused to permit discovery or hold an evidentiary hearing.
(See
Robson, 14 Tr. 1542-45) Telecasting appealed Judge Lewittes’s decision and secured its reversal by the United States Court of Appeals for the Second Circuit. (10/24/83 Unreported Second Circuit Decision, Deft. Ex. 143) As a result, discovery was conducted, a full evidentiary hearing was held, the conflicts began to come to light and the Robson Firm was forced to agree to pay back the entire $627,500.00 that it had already received in fees and disbursements. (Robson, 14 Tr. 1545-47; 5/22/87 Fee Order, Deft. Ex. 317, pp. 6-14; Robson New York Fee Trial Testimony, 17 Tr. 1938-74)
VI.
The General Electric Settlement Malpractice
6.1
The General Electric Lawsuits.
Intermodal Systems Leasing, Inc. (“ISLI”), an Overmyer-controlled leasing company (Robson Pro Haec Vice Testimony, 16 Tr. 1714-15), purchased equipment from Gen
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eral Electric Company in May, 1969. (Robson, 21 Tr. 2536-37) ISLI leased the equipment to Telecasting. (Robson, 21 Tr. 2537) For many years, Telecasting paid the rent to ISLI. (Robson, 21 Tr. 2537) ISLI failed to pay General Electric approximately $150,000.00 out of the $350,000.00 due for the purchase of equipment. (Robson, 21 Tr. 2537) General Electric sued ISLI for the balance due. (Robson, 21 Tr. 2540) ISLI transferred the equipment and the Telecasting lease to D.H. Overmyer Trucking Co., Inc. (which later changed its name to Hadar Leasing International Company, Inc.) by a backdated agreement “made as of December 8, 1975,” but actually executed in late August or early September, 1976. (Robson, 21 Tr. 2537-38, 2539; Raí-ble, 23 Tr. 2731-33; Klein, 25 Tr. 2912; “12/8/75” ISLI-Hadar Agreement, Deft. Ex. 277, pp. 2-5) The General Electric equipment was included in a Hadar lease for $16,067.37 plus sales tax per month. (10/18/78 Raíble Memorandum to Robson, Deft. Ex. 267; Raíble, 23 Tr. 2731-32) Telecasting paid the rent due to Hadar. (Robson, 21 Tr. 2539; Raible, 23 Tr. 2759-62) Mr. Robson delivered to Telecasting a legal opinion that it could enter into leases with Hadar without the approval of the New York Bankruptcy Court. (Robson, 13 Tr. 1389-90, 21 Tr. 2539-40; 4/3/78 Robson Opinion Letter to Telecasting, Deft. Ex. 133) The General Electric lawsuit against ISLI was defended by another law firm. (Robson, 21 Tr. 2540) On September 14, 1978, judgment was entered against ISLI in favor of General Electric in the amount of $209,981.97. (Robson, 21 Tr. 2540-41; General Electric Settlement Agreement, p. 2, Deft. Ex. 266, p. 5) General Electric then commenced an adversary proceeding against Telecasting in the New York Bankruptcy Court to reclaim the equipment and to recover possession of it. (Robson, 21 Tr. 2541) The Robson Firm defended Telecasting in the adversary proceeding. (Robson, 21 Tr. 2541, 22 Tr. 2602-03)
6.2
The Settlement.
Although Mr. Ressler did most of the work on the General Electric adversary proceeding (Time Summary for General Electric Settlement, Deft. Ex. 268), Mr. Robson personally negotiated the settlement (1/30/79 Leibowitz Letter to Robson, Deft. Ex. 280; 1/30/79 Leibowitz Letter to Robson with Robson Representation of Authority To Settle, Deft. Ex. 281; 4/16/79 Robson Letter to Leibowitz, Deft. Ex. 275; 5/4/79 Leibowitz Letter to Robson, Deft. Ex. 282; Ressler Dep., 30 Tr. 3007-08;
cf
Robson, 21 Tr. 2543, attempting to blame Mr. Ressler and Mr. Connery). From the outset, it was proposed that in settlement of the litigation Telecasting would pay General Electric the sum of $150,000.00, with $30,000.00 down and $120,000.00 payable in monthly installments, with interest over a three-year period.
{Compare
1/30/79 Leibowitz Letter to Robson, para. 1, Deft. Ex. 280, p. 1,
with
General Electric Settlement Agreement, para. 1, p. 3, Deft. Ex. 266, p. 6) Mr. Robson admitted that he was aware that it would be better for Telecasting to acquire title to the equipment than to leave title with Hadar. (Robson, 22 Tr. 2603) Mr. Leibowitz, the attorney for General Electric, initially proposed a settlement that included a provision that General Electric would obtain a security interest by means of a transfer of title to the equipment to General Electric and a three-year financing lease from General Electric to Telecasting “at the end of which [Telecasting] may purchase the said property for a nominal sum.” (1/30/79 Leibowitz Letter to Robson, para. 2, Deft. Ex. 280, p. 1; Robson, 22 Tr. 2655-57) Mr. Robson understood that this term would have given Telecasting title to the equipment at the end of the three-year payout period for a payment of $2.00, $5.00 or $10.00. (Robson 22 Tr. 2602, 2657) Nonetheless, Mr. Robson negotiated this provision out of the settlement. (Robson, 22 Tr. 2673-74, 2675-76; 5/4/79 Leibowitz Letter to Robson, para. 3, Deft. Ex. 282, p. 1) Mr. Robson first proposed to Mr. Leibowitz that ISLI transfer its interest in the equipment to Telecasting, that Telecasting grant General Electric a security interest in the equipment and that Telecasting and ISLI jointly agree to defend the General Electric security interest. (4/16/79 Robson Letter to Leibowitz, Deft. Ex. 275; Robson, 22 Tr. 2605-06) This proposal was an attempt to defraud General
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Electric; Mr. Robson knew that ISLI had no interest in the equipment. (Robson, 22 Tr. 2605-09; 12/13/78 Connery Letter to Ressler, para. 1, Deft. Ex. 276; “12/8/75” ISLI-Hadar Agreement, Deft. Ex. 277, pp. 2-5) The equipment had been transferred to Hadar three years earlier. (Robson, 21 Tr. 2537-38, 2539; “12/8/75” ISLI-Hadar Agreement, Deft. Ex. 277, pp. 2-5) Mr. Robson knew not only that ISLI did not have title to the equipment, but also that ISLI had no assets at all. (Robson, 13 Tr. 1409, 22 Tr. 2608-09) Further negotiations by Mr. Robson (Robson, 21 Tr. 2544) produced a final settlement agreement pursuant to which Telecasting paid the settlement amount, but Hadar retained title to the equipment and Hadar and ISLI granted security interests to General Electric. (General Electric Settlement and General Electric Security Agreement, Deft. Ex. 266, pp. 4-7, 11-23;
cfi
Robson, 21 Tr. 2544-46) The settlement was modified in this manner to the benefit of Hadar, even though Mr. Robson did not know whether Hadar was even represented in the settlement negotiations. (Robson, 22 Tr. 2603) The manner in which Mr. Robson changed the terms of the General Electric settlement enabled Hadar to charge Telecasting rent on the General Electric equipment at the same time that Telecasting was paying General Electric the remainder of the purchase price. (Klein, 25 Tr. 2909-10; Robson, 21 Tr. 2547-48) If General Electric had taken title to the equipment, Hadar could not have charged Telecasting rent on the equipment. Mr. Robson has already fully litigated — and lost — his contention that the sole impropriety in the General Electric settlement was Hadar’s failure to give Telecasting bookkeeping credits for its payments to General Electric. (Robson Bankruptcy Court Pro Haec Vice Post-Hearing Memorandum, pp. 12-14, Deft. Ex. 127; Robson District Court Pro Haec Vice Appellants’ Brief, pp. 13-16, Deft. Ex. 128; Robson District Court Pro Haec Vice Appellants’ Reply Brief, pp. 11-15, Deft. Ex. 129; Robson Court of Appeals Pro Haec Vice Appellant’s Brief, pp. 25-29, Deft. Ex. 131, Robson Court of Appeals Pro Haec Vice Appellant’s Reply Brief, pp. 2-4, Deft. Ex. 132; Pro Haec Vice Decision,
Hadar Leasing International Co. v. D.H. Overmyer Telecasting Co. (In re D.H. Overmyer Telecasting Co.),
29 B.R. 647, 651 (Bankr.N.D. Ohio 1983), aff’d, Case No. C83-2248, Slip Opinion p. 4 (N.D.Ohio Sept. 23, 1983),
aff’d,
750 F.2d 31, 33 (6th Cir.1984), Deft. Exs. 113, 112, 114)
6.3
The Malpractice.
Mr. Robson’s negotiation of the General Electric settlement, and, in particular, his elimination from the settlement of General Electric’s proposal that Telecasting receive title, is a very clear instance of malpractice (Roberts, 24 Tr. 2859-69; Miller, 9 Tr. 790-92, 808) and a violation of Disciplinary Rules 6-101 and 7-101 of the Code of Professional Responsibility (Roberts, 24 Tr. 2869-74).
6.4.
Telecasting’s Damages.
Telecasting paid $141,674.26 to or for the benefit of General Electric (Klein, 25 Tr. 2948), consisting of (a) $30,000.00 as a down payment on the settlement (Klein, 25 Tr. 2909-10, 2936-39), (b) $76,822.36, consisting of 19 monthly payments of $4,043.28 to General Electric (Klein, 25 Tr. 2909), (c) $4,851.94 to United States Trust Company, consisting of one $4,043.28 payment to General Electric made by United States Trust Company and not reimbursed by Telecasting plus the 20 percent premium paid to United States Trust Company under Telecasting’s plan of reorganization (Klein, 25 Tr. 2910-11), and (d) $30,000.00 paid to General Electric by Telecasting to settle its remaining claim (Klein, 25 Tr. 2911). (Klein General Electric Damages Summary, Deft. Ex. 289) At the same time, Telecasting made 19 monthly payments of $8,956.50 to Hadar, a total of $170,173.50. (Klein, 25 Tr. 2907-08; Klein General Electric Damages Summary, Deft. Ex. 289) Under the leasing policy of ISLI, ISLI leases to Telecasting included renewal and purchase options. (Klein, 25 Tr. 2913) If Mr. Robson had enforced the renewal and purchase option terms of the ISLI lease of the General Electric equipment to his client, Telecasting, Telecasting would have paid to ISLI only $14,253.69 in rent from June 15, 1979 through the termination of the ISLI lease in March, 1982. (Klein, 25 Tr. 2912-13; Klein General Elec-
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trie Damages Summary, Deft. Ex. 289) In addition, at that time Telecasting could have acquired title to the equipment for an additional $1.00 payment to ISLI. (Klein, 25 Tr. 2913) Telecasting’s damages are the amount it actually paid to or for the benefit of General Electric ($141,674.26) plus the amount it actually paid to Hadar ($170,-173.50) minus the amount of rent it should have paid to ISLI ($14,253.69), or a total of $297,594.07. (Klein, 25 Tr. 2914; Klein General Electric Damages Summary, Deft. Ex. 289)
VII.
The Breakup of Robson & Toboroff
7.1The “Firing” of Howard Ressler.
Mr. Ressler left Robson
&
Toboroff primarily because of his dissatisfaction with the Overmyer cases. (Ressler Dep., 25 Tr. 3010;
cf
Robson, 9 Tr. 883) Mr. Ressler’s dissatisfaction arose from one case in particular. (Ressler Dep., 25 Tr. 3010) That case was an adversary proceeding brought by a real estate broker to collect a $100,-000.00 commission on the sale of the DHO Co. Cincinnati warehouse that was owned in fee by DHO Co. (Ressler Dep., 25 Tr. 3010-12; Robson & Toboroff Final DHO Co. Fee Application, Deft. Ex. 316, pp. 27-28) At a pre-trial conference that Mr. Res-sler attended, Bankruptcy Judge Lewittes expressed his view that there appeared to be very little merit to the Consolidated Debtors’ legal position, and indicated that if the Consolidated Debtors proceeded with the case and forced witnesses to fly in from around the country, it was his intention to award costs against the Consolidated Debtors. (Ressler Dep., 25 Tr. 3012) Mr. Ressler reported Judge Lewittes’s remarks to Mr. Robson. (Ressler Dep., 25 Tr. 3013) After speaking with Mr. Over-myer, Mr. Robson told Mr. Ressler to go ahead and try the case. (Ressler Dep., 25 Tr. 3013) Mr. Ressler told Mr. Robson that he would not do so. (Ressler Dep., 25 Tr. 3013) Mr. Robson told Mr. Ressler “[YJou’re fired.” (Ressler Dep., 25 Tr. 3013) Mr. Ressler responded: “I’m a partner in the firm_ [Y]ou can’t fire me.” (Ressler Dep., 25 Tr. 3013) Mr. Robson then “said he wanted my resignation on his desk at 9:00 o’clock the next morning.” (Ressler Dep., 25 Tr. 3013) Mr. Robson tried the case the next day. (Robson, 25 Tr. 3013, 3014) The relief sought by the brokers was granted, costs were assessed against the Consolidated Debtors and the court raised with the custodial receiver of DHO Co. the question whether costs should be assessed against the Robson Firm. (Ressler Dep., 25 Tr. 3015; Robson & Toboroff Final DHO Co. Fee Application, Deft. Ex. 316, p. 28) Mr. Robson made the decision that the Robson Firm would go forward and try the case. (Ressler Dep., 25 Tr. 3014)
7.2
The Breakup of the Firm.
Mr. Ressler and Mr. Toboroff left Robson & Toboroff in the summer of 1979. (Robson, 9 Tr. 883; Miller, 3 Tr. 292) Mr. Robson and Mr. Miller formed the firm of Robson & Miller in July or August, 1979. (Miller, 3 Tr. 292) Mr. Robson and Mr. Miller claim that Robson & Miller is a separate firm from Robson & Toboroff (Robson, 9 Tr. 883; Miller, 3 Tr. 292), but this claim is inconsistent with the fact that Robson & Miller was never substituted for Robson & Toboroff, or separately retained as special counsel to Telecasting
(cf.
Telecasting Chapter XI Docket, July 1979 and Following Entries, Deft. Ex. 53). Robson & Miller is a successor to Robson & Toboroff, not a separate firm. (Connery Hadar Adversary Proceeding Testimony, 28 Tr. 3465)
7.3
Subsequent History of Robson & Miller.
On January 1, 1983, Robson & Miller changed its name to Robson, Miller & Osserman to reflect the admission of Richard A. Osserman, Esquire, as a partner. (Robson, 9 Tr. 899; Miller, 3 Tr. 296) In 1985, Mr. Osserman left the firm to go into private business ventures, and the name of the firm was changed back to Robson & Miller. (Miller, 3 Tr. 296-97) In March, 1986, Mr. Robson and Mr. Miller became contract partners of the firm of Cooper, Cohen, Singer, Ecker & Shainswit. (Miller, 3 Tr. 297) That arrangement lasted only until November, 1986, when Mr. Robson and Mr. Miller reverted to using the name Robson & Miller. (Miller, 3 Tr. 297-98)
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VIII.
The Motion To Dismiss the Telecasting Chapter XI
8.1
The Motion To Dismiss.
On September 2, 1976, FNBB moved to dismiss the Telecasting Chapter XI in the Southern District of New York on the ground that Telecasting was not insolvent, Bankruptcy Act § 323, former 11 U.S.C. § 723 , and, at the same time, moved for relief from the TOC automatic stay to permit FNBB to sell the stock of Telecasting that was owned by TOC and pledged to FNBB as security for a loan. (Robson, 11 Tr. 1075, 1077-92; Telecasting Chapter XI Docket, Entry 6, Deft. Ex. 53, p. 2)
Hadar Decision,
23 B.R. at 893-94 , Finding 30. Judge Babitt allowed both FNBB motions, but Judge Lewittes granted rehearing. (Robson, 11 Tr. 1077-78; Miller, 5 Tr. 485) On rehearing in 1980, Judge Lewittes reaffirmed Judge Babitt’s rulings allowing the motions. (Robson, 11 Tr. 1078; Miller, 5 Tr. 485) Mr. Robson knew that Mr. Overmyer was ready to file a new Chapter 11 case for Telecasting in the Northern District of Ohio, if the order dismissing the Telecasting Chapter XI was affirmed. (Robson, 12 Tr. 1155-57, 1160-61; 10/27/80 Connery Memo to Robson, Deft. Ex. 104; 10/29/80 Connery Memo to Robson, Deft. Ex. 105) Nevertheless, Mr. Robson appealed Judge Lewittes’s orders and sought a stay pending appeal. (Robson, 11 Tr. 1082-83,12 Tr. 1200-03; Robson Stay Memorandum, Deft. Ex. 108, pp. 7-8) Judge Lewittes stayed his orders pending appeal on condition that TOC pay interest to FNBB and that Telecasting provide monthly financial reports to FNBB. (Robson, 11 Tr. 1079, 1081-82) For a period of time, TOC made the required interest payments by using the funds of Telecasting. (Robson, 11 Tr. 1082;
see
Robson, 11 Tr. 1079-81) On appeal, Judge Gagliardi affirmed Judge Lew-ittes’s orders, but again granted a stay pending appeal on the same conditions. (Robson, 11 Tr. 1082-83; Miller, 5 Tr. 489) Mr. Robson took a further appeal to the United States Court of Appeals for the Second Circuit. (Robson, 11 Tr. 1083-84) Eventually, Mr. Overmyer violated the conditions of the stay by failing to make the required interest payments and failing to furnish the required financial reports. (Robson, 11 Tr. 1083) On February 6, 1981, Mr. Overmyer voluntarily withdrew the appeal to the Second Circuit, thereby causing the order dismissing the Telecasting Chapter XI to become final. (Robson, 11 Tr. 1083-84) On the same day, Mr. Overmyer filed the Telecasting Chapter 11 in this court. (Robson, 11 Tr. 1084; Telecasting Chapter 11 Docket, 2/6/81 Entry, Deft. Ex. 54, p. 1)
8.2
Citicom’s Attempt To Purchase Telecasting.
During the time that Mr. Robson was working on the motion to dismiss the Telecasting Chapter XI, a company in which he owned a 17V2 percent interest, Citicom Broadcasting Company, was attempting to purchase the assets of Telecasting. (Robson, 11 Tr. 1098, 12 Tr. 1204-05, 1215-17;
see
1/6/81 Telecasting XI Transcript, Deft. Ex. 109, pp. 19-21, 31-33; 1/15/81 TOC XI Transcript, Deft. Ex. 97, p. 4; 1/20/81 TOC XI Transcript, pp. 5-6) In addition, during the Telecasting Chapter 11, Citicom filed a competing application with the FCC for Telecasting’s broadcast license, without disclosing to the FCC that Mr. Miller held a 25 percent beneficial interest in Mr. Robson’s ownership interest in Citicom. (Robson, 13 Tr. 1361-62, 1364; Miller, 6 Tr. 576-77, 581-85; 7/30/82 Citi-com Competing FCC Application, Deft. Ex. 60)
IX.
The Weathervane Fraud
9.1
The Ouster of Daniel Harrison Ov-ermyer from Control of Telecasting.
On March 25, 1981, less than two months after Mr. Overmyer filed the Telecasting Chapter 11, this Court entered orders that permitted FNBB to vote the stock of Telecasting which was pledged to FNBB, to install new management for the debtor-in-possession, and to oust Mr. Overmyer from possession and control of Telecasting’s assets. (Telecasting 11 Docket, Entry 50, Deft. Ex. 54; 3/25/81 Stock Vote Order, Deft. Ex. 311; 3/25/81 Director Recognition Order, Deft. Ex. 312) Two days later, on March 27, 1981, Mr. Overmyer filed a Chapter 11 case for Hadar in the Southern District of New York. (Hadar New York Docket, 3/27/81 Entry, Deft. Ex. 308) On July 22, 1981,
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pursuant to the motion of Telecasting and over the continual opposition of Mr. Over-myer, the Hadar Chapter 11 was transferred to the Northern District of Ohio. (Hadar New York Docket, Deft. Ex. 308; Hadar Cleveland Docket, first Entry, Deft. Ex. 309)
9.2
Mr. Overmyer’s Decision To Sell the Weathervane Assets.
Weathervane owned the estate of Mabel M. Gabriel, a 264-acre estate in Westchester County, New York, consisting of about 180 acres in the Town of Newcastle, plus two separate contiguous parcels in the adjoining Town of Yorktown, improved by a mansion house and various appurtenant farm buildings. (Albert, 20 Tr. 2265, 2307; Mitchell, 1 Tr. 77-79, 89;
see
3/19/82 Weathervane Deed, Deft. Ex. 20; 4/15/82 Weathervane Deed, Deft. Ex. 22) In 1978, Mr. Overmyer’s “consultants,” Mr. Helmke and Mr. Strang, had consulted with Jacques A. Mitchell, III, of A.T. Houlihan, Inc., a real estate brokerage firm in Westchester County. (Mitchell, 1 Tr. 74) As a result, Mr. Overmyer had retained Harold Campbell, a local surveyor who knew the property, to prepare a topographical map and sketch plan of the Newcastle portion of the Lady Gabriel estate, showing the feasibility of dividing the property into 49 building lots, the maximum number that can be developed without constructing a public sewerage system. (Mitchell, 1 Tr. 77, 82-83; Campbell 1978 Sketch Plan, Deft. Ex. 2) Immediately after he lost control of Telecasting in March, 1981, Mr. Overmyer commenced efforts to sell the Lady Gabriel estate.
{See
Mitchell, 1 Tr. 73-74) During this period, the West-chester real estate market was extremely depressed. (Albert, 20 Tr. 2270-72; Las-berg, 20 Tr. 2229) In April, 1981, Mrs. Overmyer gave Mr. Mitchell the Campbell sketch and asked him what the property was worth. (Mitchell, 1 Tr. 80-81) Mr. Mitchell gave Mrs. Overmyer a superficial view based on the Campbell sketch that the Lady Gabriel estate should sell for about $1,000,000.00 on the basis of dividing it into 49 building lots. (Mitchell, 1 Tr. 82-83; 4/22/81 Mitchell Letter to Mrs. Overmyer, Deft. Ex. 3) Mr. Mitchell explained to Mrs. Overmyer that, in order to obtain the best price for the property, it would have to be sold to a developer “subject to” obtaining appropriate subdivision approval rather than on an immediate all cash basis. (Mitchell, 1 Tr. 81-82; 4/22/81 Mitchell Letter to Mrs. Overmyer, Deft. Ex. 3) He also told her that the Campbell sketch was not a sensible plan of development, and he suggested á different division of the property. (Mitchell, 1 Tr. 83-84) As a result, Mr. Overmyer retained Mr. Campbell to prepare a new sketch plan based on dividing the property into two parcels, one containing the mansion house and appurtenances and the other large enough to accommodate 49 building lots. (Mitchell, 1 Tr. 84-85, 87; 5/8/81 Overmyer Letter to Campbell, Deft. Ex. 5) In May, 1981, Mr. Overmyer retained Eugene Albert of The Albert Appraisal Company, Inc. to appraise the Lady Gabriel estate. (Albert, 20 Tr. 2265-66, 2273, 2300) Mr. Albert appraised the property for $2,075,000.00, or approximately $11,525.00 per acre. (Albert, 20 Tr. 2280; 5/27/81 Albert Appraisal, PL Ex. A) Mr. Overmyer refused to pay to The Albert Appraisal Company the balance due for the appraisal, because he was disappointed that the value was as low as it was and thought that it should have been higher. (Albert, 20 Tr. 2315-16) He even attempted, unsuccessfully, to convince Mr. Albert to increase his appraisal. (Albert, 20 Tr. 2316) During the summer and fall of 1981, Mr. Overmyer listed the Lady Gabriel estate with A.T. Houlihan, Inc., and Mr. Campbell and Mr. Mitchell worked together on a new sketch plan based on Mr. Mitchell’s advice that the raw development land should be divided from the mansion parcel. (Mitchell, 1 Tr. 88-90) Mr. Campbell prepared a sketch plan and a subdivision map dividing the Lady Gabriel estate into a 61-acre parcel containing the mansion and appurtenances and a 117-acre parcel of raw land for development. (Mitchell, 1 Tr. 89-90; Campbell Revised Sketch Plan, Deft. Ex. 6; Campbell Survey, Deft. Ex. 7) Mr. Mitchell also made a systematic analysis of how the Lady Gabriel property should be marketed to maximize the selling price. (Mitchell, 1 Tr. 91) Mr. Mitchell consulted with David Portman, the president of a planning firm
*149
and a consultant to the Newcastle Planning Board. (Mitchell,' 1 Tr. 91-92) As a result, Mr. Mitchell concluded that under the Mul-ti-Family Planned Development (“MFPD”) ordinance of the Town of Newcastle, the 117-acre parcel could be subdivided into a minimum of 157 two-bedroom units and a maximum of 178 two-bedroom units. (Mitchell, 1 Tr. 93-94) The Lady Gabriel estate was one of only three or four properties in the Town of Newcastle that were large enough to qualify for development under the MFPD ordinance. (Albert, 20 Tr. 2269-70; Lasberg, 20 Tr. 2247-48) At this point in time, Mr. Overmyer was insisting to Mr. Mitchell that he wanted $20,-000.00 per acre for the property, which would be $2,340,000.00 for the 117-acre development parcel alone. (Mitchell, 1 Tr. 96) Mr. Mitchell repeatedly advised Mr. Ov-ermyer that the only way to obtain such a price was to sell the property to a developer “subject to” obtaining necessary subdivision approval. (Mitchell, 1 Tr. 95-96;
see
Albert, 20 Tr. 2281-84; Lasberg, 20 Tr. 2225-26, 2237-38, 2239) Because developers think in terms of units rather than acres, Mr. Mitchell had to translate Mr. Over-myer’s price into a per-unit price in order to interest developers in purchasing the property.
(See
1/29/82 Mitchell Letter to Schamberg, Deft. Ex. 9, p. 1) Mr. Mitchell contacted the three leading developers in Newcastle. (Mitchell, 1 Tr. 96-97) Two were not interested, but the third, Ellis M. Lasberg, was. (Mitchell, 1 Tr. 97-98) Mr. Lasberg lined up two very substantial individuals, either one of whom was capable of attracting the necessary bank financing and assembling a financially solid investor group. (Lasberg, 20 Tr. 2223-25; Mitchell, 1 Tr. 98) Mr. Lasberg offered to pay $12,-500.00 per unit, a total of $2,359,000.00 based on 188 units. (Lasberg, 20 Tr. 2225-27;
see
Mitchell, 1 Tr. 99;
see also
1/29/82 Mitchell Letter to Shamberg, Deft. Ex. 9, p. 1) The number of units available under the MFPD ordinance depends upon the size of the units. (Albert, 20 Tr. 2269) The MFPD ordinance permitted building more studio and one-bedroom units than two-bedroom units. (Albert, 20 Tr. 2269) Mr. Lasberg believed that he was legitimately entitled to between 235 and 275 units, and that, even with the politics of the Newcastle Planning Board, he would obtain approval for between 175 and 195 units. (Lasberg, 20 Tr. 2226) On November 11, 1981, Mr. Mitchell wrote to Mr. Overmyer conveying Mr. Las-berg’s offer (translated into $20,000.00 per acre of $2,340,000.00) with $50,000.00 down and closing in 18 to 24 months after subdivision approval was obtained. (Mitchell, 1 Tr. 99-100; Lasberg, 20 Tr. 2229; 11/11/81 Mitchell Letter to Overmyer, Deft. Ex. 8) Mr. Mitchell concluded his letter by stating that Mr. Lasberg was “ready, willing and able to sign a contract and proceed immediately.” (11/11/81 Mitchell Letter to Over-myer, Deft. Ex. 8) Mr. Overmyer neither accepted nor rejected Mr. Lasberg’s offer. (Mitchell, 1 Tr. 104-05) Instead, he told Mr. Mitchell that he needed some cash flow to cover taxes and interest on the mortgage. (Mitchell, 1 Tr. 104-05) He told Mr. Mitchell that at that time he was favoring the “subject to” sale concept. (Mitchell, 1 Tr. 105) Mr. Mitchell went back to Mr. Lasberg with Mr. Overmyer’s request, and Mr. Las-berg offered to pay $60,000.00 to $100,-000.00 per year during the “subject to” waiting period. (Mitchell, 1 Tr. 108-09; Lasberg, 20 Tr. 2229;
see
1/29/82 Mitchell Letter to Shamberg, Deft. Ex. 9, p. 1) On January 29, 1982, Mr. Mitchell wrote to Stuart Shamberg, Mr. Lasberg’s attorney, explaining the terms of the offer. (Mitchell, 1 Tr. 109-10; 1/29/82 Mitchell Letter to Shamberg, Deft. Ex. 9)
9.3
The Constructive Trust/Equitable Men Claim.
On August 25, 1981, Hadar commenced an adversary proceeding in the Telecasting Chapter 11, seeking relief from the Telecasting automatic stay with respect to the broadcast equipment leased by Hadar to Telecasting. (Hadar Adversary Proceeding Docket, Deft. Ex. 310)
Hadar Decision,
23 B.R. 823 . On September 29, 1981, FNBB was granted leave to intervene as a defendant in the Hadar adversary proceeding. (Hadar Adversary Proceeding Docket, Entry 17, Deft. Ex. 310) On October 23, 1981, FNBB filed an answer and counterclaim asserting claims to an equitable lien and a constructive trust on the assets of the Overmyer entities. (FNBB
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Hadar Answer and Counterclaim, Ex. B to Deft. Ex. 71, prayers 2 and 3, p. 3) “Over-myer entities” was defined as “a vast number of corporations” “owned or controlled” by Mr. Overmyer, including Telecasting, Hadar and ISLI, the then parties to the Hadar adversary proceeding. (FNBB Hadar Answer and Counterclaim, Ex. B to Deft. Ex. 71, para. 1, p. 1) After Mr. Over-myer, DHO Co. and Overmyer Distribution Services, Inc. intervened as plaintiffs, Telecasting and FNBB asserted similar claims in their answers and counterclaims to the complaints filed by each of them.
(Kg.,
FNBB DHO Co. Answer and Counterclaim, Ex. D to Deft. Ex. 71, para. 1 and prayers 3 and 4, pp. 1, 7; Telecasting DHO Co. Answer and Counterclaim, Ex. E to Deft. Ex. 71, prayers 1 and 3, p. 2) On December 8, 1981, at the deposition of Expediter Warehouse Company by Stuart K. Strang, Mr. Hopkins, counsel for FNBB, expanded on the constructive trust claim by announcing that Telecasting and FNBB were, in particular, attempting to impress a constructive trust on the assets of Weathervane Farms, Inc. (“Weathervane”). (Expediter Deposition, 16 Tr. 1690, 1698-1701) Mr. Brown, who represented the witness, requested that the reporter get this exchange typed up quickly. (Expediter Deposition, 16 Tr. 1699)
9.4
The $2,000.00 “Personal” Check.
On January 11, 1982, Mr. Overmyer sent Mr. Robson check number 1784 drawn on the account of Omega Executive Services Corp. to the order of Robson & Miller in the amount of $1,000.00. (1/11/82 Omega Check, Deft. Ex. 224; Omega Cash Disbursements Journal, Check No. 1784 “Void,” Deft. Ex. 222, p. 1) On January 13, 1982, Mr. Robson returned the check to Mr. Overmyer with his personal letter requesting that Mr. Overmyer “replace this check with a check of yours personally.” (1/13/82 Robson Letter to Overmyer, Deft. Exs. 224, 221) On January 25, 1982, Mr. Overmyer caused Omega Executive Services Corp. to write him a check for $2,000.00 as a “loan.” (Carrieri, 3 Tr. 267-68; Omega Cash Disbursements Journal, Check No. 1823, Deft. Ex. 27, p. 8) Mr. Overmyer then wrote his personal check to Robson & Miller on Thursday, January 28, 1982. (6/25/82 Overmyer Personal Bankruptcy Schedules, Deft. Ex. 223, last page; Robson, Miller & Osserman Second Amended Interrogatory Answers, Exhibit “A”, Deft. Ex. 23, p. 15;
see
Miller, 27 Tr. 3329-30; Robson, 19 Tr. 2172-73) Mr. Robson denied having any recollection of what services the Robson Firm was performing for Mr. Overmyer and his entities in January, 1982. (Robson, 13 Tr. 1265-66) The source of the $2,000.00 check is listed as “Unknown” in the Robson Firm’s Interrogatory Answers. (Robson, Miller & Osserman Second Amended Interrogatory Answers, Exhibit “A”, Deft. Ex. 23, p. 15) With the exception of one check received during the first month of the Robson Firm’s existence, when the Robson Firm may not have been “organized” (Miller, 6 Tr. 575, 7 Tr. 631— 32), this is the only Overmyer check in six years for which the Robson Firm was unable to identify the source. (Robson, Miller & Osserman Second Amended Interrogatory Answers, Exhibit “A”, Deft. Ex. 23; Miller, 7 Tr. 631-32;
cf.
Robson, 19 Tr. 2175) Mr. Robson denied knowing where the $2,000.00 check came from (Robson, 12 Tr. 1233-36, 13 Tr. 1265-66, 19 Tr. 2162), and repeatedly denied any memory or knowledge of ever having received a personal check from Mr. Overmyer (Robson, 12 Tr. 1820; 13 Tr. 1316-18, 19 Tr. 2169, 2170, 2172, 2173). Mr. Robson’s request that an Overmyer corporate check be replaced with Mr. Overmyer’s personal check is inconsistent with the established arrangement between Mr. Robson and Mr. Overmyer that checks from Mr. Over-myer’s corporate entities would cover work done for any Overmyer entity, including Mr. Overmyer himself.
(See
Finding 4.6, supra) Neither Mr. Robson nor Mr. Miller had any explanation for the inconsistency. (Robson, 19 Tr. 2173-74; Miller, 27 Tr. 3330-31)
9.5
Mr. Overmyer’s Sudden Change of Heart.
On the weekend of January 30-31, 1982, two days after the $2,000.00 check was received by the Robson Firm and one day after Mr. Mitchell spelled out the terms of the Lasberg offer for Mr. Las-
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berg’s attorney, Mr. Overmyer met with Mr. Mitchell at Mr. Overmyer’s home. (Mitchell, 1 Tr. 95) Mr. Overmyer informed Mr. Mitchell that he wanted to sell the Lady Gabriel estate “immediately and for all cash without any conditions.” (Mitchell, 1 Tr. 113) Mr. Mitchell argued “that this [was] not the way to sell [the property], that the subject to sale [would] get by far the best price and that a sudden sell it as is move would simply make a very substantial loss for him.” (Mitchell, 1 Tr. 114) Mr. Overmyer reiterated: “I want to sell it now, all cash, without conditions.” (Mitchell, 1 Tr. 114) Mr. Overmyer gave Mr. Mitchell no reason at that time for his sudden change of heart. (Mitchell, 1 Tr. 113-14) Later, Mr. Overmyer told Mr. Mitchell “that the bank was going to grab it and he wanted to sell it quickly.” (Mitchell, 2 Tr. 159, admitted into evidence at 27 Tr. 3280) On Monday, February 1, 1982, Mr. Mitchell wrote to Mr. Overmyer pleading with him to reconsider a sale of the 117-acre parcel either to Mr. Lasberg or to one of the other local developers “for a price of $20,000.00 per acre ($2,340,000.00) on a ‘subject to’ basis, asking for $100,-000.00 per year during the approval period, not to exceed two years.” (2/1/82 Mitchell Memorandum to Overmyer, Deft. Ex, 10; Mitchell, 1 Tr. 113) Rather than heeding Mr. Mitchell’s advice, Mr. Overmyer embarked on a precipitous liquidation of his Westchester real estate. He immediately listed both the remaining 61 acres of the Lady Gabriel estate and his own adjacent residence with A.T. Houlihan, Inc. and Sotheby Parke Bemet International Realty Corporation, without making any of the repairs and cosmetic improvements that Mr. Mitchell advised him would be necessary to obtain top price. (Mitchell,. 2 Tr. 125-27; 2/2/82 Weathervane Listing Agreement, Deft. Ex. 11) Mr. Mitchell carried out Mr. Overmyer’s instructions on the sale of the 117-acre parcel by going back to the developers and soliciting immediate, all cash offers. (Mitchell, 3 Tr. 207-08) Because of Mr. Overmyer’s sudden change of heart, Mr. Mitchell had only a matter of days to attempt to obtain immediate cash offers. (Mitchell, 3 Tr. 225) Mr. Mitchell had essentially dropped any efforts to obtain immediate cash offers after Mr. Las-berg agreed to meet Mr. Overmyer’s asking price. (Mitchell, 3 Tr. 226-27) Arnold Teasdale, a local developer, in concert with Yorkville Federal Savings and Loan Association, offered $700,000.00 for the 117-acre parcel (slightly less than $6,000.00 per acre) on an immediate cash basis. (Mitchell, 1 Tr. 119-20) On February 10, 1982, Mr. Mitchell wrote to Mr. Overmyer informing him of Mr. Teasdale’s offer with his opinion that it was “atrocious.” (2/10/82 Mitchell Letter to Overmyer, Deft. Ex. 13; Mitchell, 2 Tr. 130-31;
cf.
Mitchell, 3 Tr. 201) Mr. Mitchell’s opinion was echoed by Mr. Albert’s opinion that the Teasdale offer was “preposterously low” (Albert, 20 Tr. 2299-2300) and Mr. Lasberg’s opinion that the Teasdale offer “was the steal of the century” (Lasberg, 20 Tr. 2231). On that very day, February 10, 1982, Mr. Overmyer conveyed to Nancy Zeckendorf a vacant parcel of the land of Intermodal Terminals, Inc., on which his residence was located and on which FNBB sought to impress a constructive trust. (2/10/82 Intermodal Terminals Deed to Zeckendorf, Deft. Ex. 238) In his February 10, 1982 letter conveying Mr. Teasdale’s offer to Mr. Overmyer, Mr. Mitchell advised: “We believe they would increase it to $750,000.00, but the evidence so far indicates that is their maximum dollar.” (2/10/82 Mitchell Letter to Over-myer, Deft. Ex. 13) Mr. Overmyer immediately accepted Mr. Teasdale’s $700,000.00 cash offer (Mitchell, 1 Tr. 121-22, 2 Tr. 131;
see
2/18/82 Mitchell-Teasdale Memorandum of Agreement, Deft. Ex. 14, p. 1), even though it was less than one-third of the $20,000.00 per acre on which Mr. Overmyer had previously insisted (Mitchell, 1 Tr. 96;
see
Albert, 20 Tr. 2315-16). On February 19, 1982, Mr. Mitchell sent a memorandum of agreement to Mr. Shamberg, Mr. Teasdale’s attorney, and sent a copy to Mr. Connery, Mr. Overmyer’s house counsel. (2/19/82 Mitchell Letter to Shamberg, Deft. Ex. 15; 2/19/82 Mitchell Letter to Connery, Deft. Ex. 16; 2/18/82 Mitchell-Teasdale Memorandum of Agreement, Deft. Ex. 14; Mitchell, 2 Tr. 131-33) Mr. Teasdale executed the memorandum of
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agreement with changes added by Mr. Shamberg, and returned it to Mr. Mitchell, who sent an executed copy to Mr. Connery on February 23, 1982. (2/23/82 Mitchell Letter to Connery, Deft. Ex. 17; 2/18/82 Memorandum of Agreement, Deft. Ex. 14; Mitchell, 2 Tr. 132-34) On February 24, 1982, Mr. Mitchell sent Mr. Teasdale a formal contract of sale. (2/24/82 Mitchell Letter to Teasdale, Deft. Ex. 18; Mitchell, 2 Tr. 134-35) The formal contract of sale of the 117-acre parcel for $700,000.00 was initially drafted by Mr. Singleton, Mr. Mitchell’s attorney, was redrafted by Mr. Shamberg, Mr. Teasdale’s attorney, was sent to Mr. Connery and was thereafter executed. (Mitchell, 3 Tr. 210-11; 2/82 Weathervane Contract of Sale to Chappa-qua Building Corporation and Yorkville Equities Corp., Deft. Ex. 19; Mitchell, 2 Tr. 134-35)
9.6
Mr. Robson’s Knowledge of the Constructive Trust Claim.
Mr. Robson was deposed in the Hadar adversary proceeding on December 7, 1981. (Robson Dep., 16 Tr. 1707) Mr. Robson learned of the constructive trust claim asserted by Telecasting and FNBB no later than early March, 1982. Trial of the Hadar adversary proceeding began on February 22, 1982. (Hadar Adversary Proceeding Docket, 2/22/82 Entry, Deft. Ex. 310) On March 3, 1982, Mr. Connery, house counsel for the Overmyer entities, wrote to Mr. Robson with copies to Gary Blum and Fred Weinberg, general bankruptcy counsel for DHO Co., Craig Bright and Richard Parsons, counsel for the custodial receiver of DHO Co., and William Fabrizio, counsel for the creditors’ committee of DHO Co., enclosing copies of various papers from the Hadar adversary proceeding. (3/3/82 Connery Letter to Robson, Deft. Ex. 148; Robson, 15 Tr. 1667-68) The letter expressly states that the enclosures included the complaints filed by DHO Co. and Mr. Overmyer (3/3/82 Connery Letter to Robson, Deft. Ex. 148, p. 2) and the application filed by DHO Co. in the studio lease case (3/3/82 Connery Letter to Robson, Deft. Ex. 148, p. 3;
see Hadar Decision,
23 B.R. at 883-85 , Finding 26;
In re D.H. Overmyer Telecasting Co.,
29 B.R. 645 [Bankr. N.D. Ohio 1983]). It also refers to unspecified “papers” being enclosed. (3/3/82 Connery Letter to Robson, Deft. Ex. 148, p. 2) These “papers” included the answers and counterclaims filed by Telecasting and FNBB. Mr. Fabrizio’s time entry for March 4, 1982, submitted as part of the interim fee application of Hahn & Hessen in the Warehouse Chapter XI records 1.25 hours for “reviewing Robson letter
[i.e.,
Mr. Connery’s letter
to
Mr. Robson] & Telecasting-Hadar pleadings.” (8/11/82 Hahn & Hes-sen Interim Fee Application, 3/4/82 WRF (William R. Fabrizio) Time Slip, Deft. Ex. 199) On March 15,1982, Mr. Connery wrote to Mr. Robson and Mr. Blum and began the letter: “I have forwarded to each of you the principal pleadings in connection with the intervention of D.H. Overmyer Co., Inc. in the application brought by Hadar in the Telecasting case in Cleveland seeking the payment of rent as lessor to Telecasting. As you will note from the pleadings, the Bank has set up a claim on the loan balances due and it alleges the warehouse company owes at the present time with interest about $20 million.” (3/15/82 Connery Letter to Robson and Blum, Deft. Ex. 70, p. 1) The pleadings that Mr. Connery stated he had already forwarded to Mr. Robson included FNBB’s answer and counterclaim to the DHO Co. complaint in the Hadar adversary proceeding in which FNBB alleged an indebtedness “in excess of $20,000,000” and prayed for a constructive trust and an equitable lien on the assets of the Overmyer entities. (3/31/82 Application of Debtor-In-Possession, Deft. Ex. 71, Exhibit D, para. 2 and prayers 3 and 4, pp. 2, 7) By contrast, in its original answer and counterclaim filed several months earlier, FNBB had alleged the amount then due as “in excess of $18,000,-000.” (3/31/82 Application of Debtor-In-Possession, Exhibit B, para. 2, p. 1) The Robson Firm also received the Telecasting and FNBB pleadings from Calfee, Halter & Griswold, the Cleveland counsel for DHO Co. (3/3/82 Calfee Halter Letter to Ven-ditto, Deft. Ex. 200; Draft DHO Co. Application To Retain Calfee Halter, Exhibits B, D and E, Deft. Ex. 201) Calfee, Halter & Griswold was representing DHO Co., but
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had not been retained in the Warehouse Chapter XI, and was being paid ostensibly by a Bermuda family trust controlled by Mr. Overmyer. (Draft DHO Co. Application To Retain Calfee Halter, p. 7 and Exhibit C, Deft. Ex. 201; Calfee Halter Statements of Fee Arrangements, Deft. Exs. 313-15) On March 3, 1981, Calfee, Halter
&
Griswold wrote to Michael J. Venditto, who was then an associate at the Robson Firm, enclosing a draft of an “Application of Debtor-In-Possession For Retention Of Cal-fee, Halter & Griswold As Counsel.” (3/3/82 Calfee Halter Letter to Venditto, Deft. Ex. 200; Robson, 18 Tr. 2051) The enclosed draft “APPLICATION OF DEBTOR-IN-POSSESSION FOR RETENTION OF CALFEE, HALTER & GRISWOLD AS COUNSEL” had attached as exhibits (A) the “Application” filed by DHO Co. in the Studio Lease case, (B) the original October 23, 1981 answer and counterclaim filed by FNBB in the Hadar adversary proceeding, (C) the complaint filed by DHO Co. in the Hadar adversary proceeding, (D) the answer and counterclaim filed by FNBB in response to the DHO Co. complaint in the Hadar proceeding, (E) the answer and counterclaim filed by Telecasting in response to the DHO Co. complaint in the Hadar adversary proceeding, and (F) an “AFFIDAVIT OF WM. TOUSLEY SMITH, ESQ., IN SUPPORT OF APPLICATION” executed by Mr. Smith of Calfee, Halter & Griswold on March 3, 1982. (Draft DHO Co. Application to Retain Calfee Halter, Deft. Ex. 201; 3/3/82 Calfee Halter Letter to Venditto, Deft. Ex. 200; Robson, 18 Tr. 2052-55) The FNBB answers and counterclaims asserted constructive trust claims against the assets of all Overmyer entities. (Draft DHO Co. Application To Retain Cal-fee Halter, Exhibit B, prayer 3, p. 3, Exhibit D, prayer 4, p. 7, Deft. Ex. 201) The cover letter from Calfee, Halter & Gris-wold expressly referred to the enclosure of the “Affidavit of Wm. Tousley Smith, Esq., In Support of Application.” (3/3/82 Calfee Halter Letter to Venditto, Deft. Ex. 200) Mr. Robson eventually admitted that he knew that the Overmyer entities against which FNBB sought a constructive trust included Weathervane. (Robson, 19 Tr. 2134-35, 2144-45;
see
Robson, 15 Tr. 1597-98, 1599-1600) The Telecasting answer and counterclaim contained a constructive trust claim similar to that of FNBB, but limited to the assets of DHO Co. (Draft DHO Co. Application To Retain Calfee Halter, Exhibit E, prayer 1, p. 2, Deft. Ex. 201) The distinction is of no significance, however, because Mr. Robson considered Telecasting and FNBB to be indistinguishable after FNBB took over control of Telecasting. (Robson Pro Haec Vice Testimony, 16 Tr. 1741; Robson, 11 Tr. 1125,15 Tr. 1593) Mr. Overmyer signed the draft “Application of Debtor-In-Possession for Retention of Cal-fee, Halter & Griswold as counsel” on March 5,1982, and Mr. Connery returned it to Mr. Venditto on March 6. (3/6/82 Connery Handwritten Note on Draft DHO Co. Application To Retain Calfee Halter, Deft. Ex. 201, p. 1) Mr. Venditto’s DHO Co. time charges show that he reviewed the Calfee application on March 10, 1982. (Robson, Miller & Osserman Final DHO Co. Fee Application, Exhibit I, March 1982 Monthly Summary of Time Charges, Deft. Ex. 265) On March 18, 1982, Mr. Connery sent Mr. Venditto a memorandum suggesting revisions to the “Application of Debtor-In-Possession for Retention of Calfee, Halter & Griswold as Counsel.” (3/18/82 Connery Memo to Venditto, Deft. Exs. 146, 147) Mr. Connery’s suggested revisions included the addition of a new paragraph 5 expressly referring to FNBB’s claim of a constructive trust on the assets of the Overmyer entities:
5. On September 29, 1981, over the objections of Hadar, the Bankruptcy Court permitted FNBB to intervene in the Hadar Litigation as the sole shareholder of Telecasting. On October 23, 1981, FNBB filed an answer and counterclaim to Hadar’s complaint (see Exhibit “B” hereto), wherein FNBB asserted that Daniel H. Overmyer “owned or controlled a vast number of corporations”; that at various times various of the Over-myer entities had borrowed from and were indebted to FNBB in an amount in excess of $18 million and that said Over-myer entities conspired to defraud FNBB. FNBB prayed for the establish
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ment of an equitable lien and the imposition of a constructive trust on the assets of the Overmyer entities in an amount in excess of $18 million.
(3/18/82 Connery Memo to Venditto, Deft. Exs. 146, 147, p. 2) Mr. Venditto sent Mr. Connery’s memorandum to Mr. Robson with the handwritten note: “Mort — Is this O.K.?” (3/18/82 Connery Memo to Venditto, Deft. Ex. 147, p. 1; Venditto Dep. 25 Tr. 3029;
ef.
Robson, 15 Tr. 1651-52) Mr. Robson sent the memorandum back to Mr. Venditto with his own handwritten note: “I still haven’t seen a paragraph explaining why DHO [Co.] intervened and why court permission wasn’t obtained beforehand.” (3/18/82 Connery Memo to Venditto, Deft. Ex. 147, p. 1; Venditto Dep., 25 Tr. 3030; Robson, 15 Tr. 1652) Mr. Venditto already knew about the constructive trust claim when he received Mr. Connery’s memorandum.
{See
Venditto Dep., 25 Tr. 3031-35; 3/31/82 Application of Debtor-In-Possession, Deft. Ex. 71, para. 6, p. 3) Earlier in March, Mr. Robson had told him that FNBB was seeking a constructive trust on the assets of the Overmyer entities. (Venditto Dep., 25 Tr. 3032-33) The Robson Firm used the draft “Application of Debtor-In-Possession for Retention of Calfee, Halter & Griswold as Counsel” to prepare the “Application of Debtor-In-Possession” that the Robson Firm filed on March 31, 1982.
(Compare
3/31/82 Application of Debtor-In-Possession, Deft. Ex. 71,
with
Draft DHO Co. Application to Retain Cal-fee Halter, Deft. Ex. 201,
and
Connery Memo to Venditto, Deft. Exs. 146, 147;
see
Draft DHO Co. Application To Retain Cal-fee Halter with Connery Handwritten Revisions, Deft. Exs. 202, 146, 147; Robson, Miller & Osserman Final DHO Co. Fee Application, Exhibit I, March 1982 Monthly Summary of Time Charges, Venditto Entries for 3/10/82, 3/29/82, 3/30/82, 3/31/82, Deft. Ex. 265; Robson, 18 Tr. 2055-61) The Robson Firm used the same photocopies of pleadings that were sent to it by Calfee, Halter
&
Griswold with the draft “Affidavit of Debtor-In-Possession for Retention of Calfee, Halter & Griswold as Counsel” as the exhibits to the final “Application of Debtor-In-Possession” that it filed on March 31, 1982.
{Compare
Draft DHO Co. Application to Retain Cal-fee Halter, Exhibits A-E, Deft. Ex. 201,
with
3/31/82 Application of Debtor-In-Possession, Exhibits A-E, Deft. Ex. 71; Robson, 18 Tr. 2055-61) Comparison of the idiosyncrasies of the photocopy of the “Application of Debtor-In-Possession” that is in evidence with those of the photocopy of the draft “Application of Debtor-In-Possession for Retention of Calfee, Halter & Griswold as Counsel” that is in evidence showed that the original exhibits were identical right down to flaws in typing and photocopying. (Robson, 18 Tr. 2055-61;
compare
Draft DHO Co. Application To Retain Calfee Halter, Exhibits A-E, Deft. Ex. 201,
with
3/31/82 Application of Debtor-In-Possession, Exhibits A-E, Deft. Ex. 71) The change from an “Application of Debtor-In-Possession for Retention of Calfee, Halter & Griswold as Counsel” to an “Application of Debtor-In-Possession” is explained by the fact that on March 31, 1982, special counsel for Calfee, Halter & Griswold, the New York firm of Gelberg & Abrams, instructed the Robson Firm not to use the affidavit of Wm. Tousley Smith and not to seek the
nunc pro tunc
retention of Cal-fee, Halter
&
Griswold. (3/31/82 Gelberg & Abrams Letter to Venditto, Deft. Ex. 203; Robson, 18 Tr. 2065-68) As a result, the Robson Firm made a last minute revision to the title and text of the application and removed “Exhibit F,” the affidavit of Mr. Smith, before filing the “Application of Debtor-In-Possession” on March 31, 1982. (Robson, Miller & Osserman Final DHO Co. Fee Application, Exhibit I, March 1982 Monthly Summary of Time Charges, Ven-ditto Entry for 3/31/82, Deft. Ex. 265) A hearing was held on the “Application of Debtor-ImPossession” on April 1, 1982. (Robson, 13 Tr. 1337) On April 5, 1982, an order purporting to declare the participation of DHO Co. in the Hadar adversary proceeding to be a “nullity” was entered on a notice of settlement filed by the custodial receiver and a letter of response from the Robson Firm. (4/5/82 “Nullity” Order, Deft. Ex. 121; 4/2/82 Notice of Settlement, Deft. Ex. 197; 4/2/82 Robson Letter to Lewittes, Deft. Ex. 198) Telecasting and
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FNBB were never given notice of either the April 1 hearing or the settlement of the April 5 order. (Robson, 18 Tr. 2041, 2042-43) After a hearing held on proper notice, this Court held that DHO Co. remained a party to the Hadar adversary proceeding and was bound by the judgment.
Hadar Decision,
23 B.R. at 916 , Finding 38.8. Mr. Overmyer later told Mr. Mitchell that Mr. Robson knew about the Weathervane Farms sale before it took place. (Mitchell, 2 Tr. 184-86, admitted into evidence at 27 Tr. 3280) Mr. Robson admitted at trial that he knew about the constructive trust claim of FNBB and Telecasting during the preparation of the “Application of Debtor-In-Possession.” (Robson, 15 Tr. 1636)
9.7
Mr. Robson’s Participation in the Weathervane Sale.
Mr. Connery was supposed to handle the closing of the Weather-vane sale, but he was required to be in Cleveland on the scheduled closing date to testify in the Hadar adversary proceeding. (Venditto Dep., 25 Tr. 3035; 3/10/82 Connery Letter to Venditto, Deft. Ex. 294) As a result, the Robson Firm was asked to handle the closing. (Venditto Dep., 25 Tr. 3035) Mr. Robson personally assigned the work on the Weathervane closing to Mr. Venditto. (Venditto Dep., 25 Tr. 3035-36; Robson, 19 Tr. 2107-08) Mr. Robson told Mr. Venditto that he was to “handle the closing” of “a sale of some land in Westchester.” (Venditto Dep., 25 Tr. 3036;
see
Robson, 8 Tr. 889-91, 19 Tr. 2108) Mr. Robson was familiar with the Overmyer real estate in Westchester County because he had previously attended social functions both at Mr. Overmyer’s home and at the Lady Gabriel estate that was the home of Barbara and Stuart Strang, Mr. Overmyer’s daughter and son-in-law. (Robson, 14 Tr. 1452-53, 15 Tr. 1601-02; Raíble, 23 Tr. 2691) On March 10, 1982, Mr. Connery sent Mr. Venditto a letter of instructions in which he explained that title to the real estate was held by Weathervane. (3/10/82 Connery Letter to Venditto, Deft. Ex. 294) Mr. Venditto prepared a deed, reviewed the title report and dealt with some problems of requalification of Weathervane, (Venditto Dep., 25 Tr. 3036-37;
see
Robson, 12 Tr. 1188-89, 19 Tr. 2107) Mr. Venditto also obtained a postponement of the closing to allow time to satisfy the mortgage on the property. (3/11/82 Venditto Letter to Shamberg, Deft. Ex. 295) As a result, Mr. Connery was able to attend the closing with Mr. Venditto. (Venditto Dep., 25 Tr. 3037) As it turned out, Mr. Connery and Mr. Strang attended without Mr. Venditto, because Mr. Venditto’s car broke down. (Venditto Dep., 25 Tr. 3037) The closing occurred on March 19, 1982, the twentieth day of trial in the Hadar adversary proceeding. (3/19/82 Weathervane Deed, Deft. Ex. 20; Hadar Adversary Proceeding Docket, 3/19/82 Entry, Deft. Ex. 310) On the day of the closing, March 19, 1982, Mr. Robson caused a bill for $2,000.00 for the work on the Weathervane closing to be sent to Weathervane (3/19/82 Robson Bill to Weathervane, Deft. Ex. 205), five bills for Overmyer personal work to be sent to Mr. Overmyer (3/19/82 Robson Bills to Mr. Overmyer, Deft. Exs. 206, 207, 208, 209, 210) and two bills for personal work to be sent to Mr. Strang (3/19/82 Robson Bills to Strang, Deft. Exs. 211, 212), all directed to Mr. Overmyer’s offices at 3 Park Avenue. (Venditto, Dep., 25 Tr. 3039-40;
cf.
Robson, 19 Tr. 2105-12) On March 23, 1982, Mr. Connery sent Mr. Venditto a $2,000.00 check of Omega Executive Services Corp. for the work on the Weathervane closing. (2/23/82 Connery Letter to Venditto, Deft. Ex. 213; Venditto Dep., 25 Tr. 3040-41; Robson, Miller & Osserman Second Amended Interrogatory Answer, Exhibit A, Deft. Ex. 23, p. 15) The $2,000.00 came out of the proceeds of the Weathervane sale. (Weathervane Receipts and Disbursements Journal, Deft. Ex. 26, pp. 1, 5; Omega Bank Statement and Deposit Records, Deft. Ex. 28; Omega Receipts and Disbursements Journal, Deft. Ex. 27, p. 1; 2/23/82 Connery Letter to Venditto, Deft. Ex. 213;
see
Carrieri, 3 Tr. 253-54) After the closing, Mr. Venditto obtained documentation that a judgment that appeared to be a lien on the property had been vacated (3/22/82 Venditto Letter to Connery, Deft. Ex. 296) and received and transmitted to Mr. Connery the original assignment of mortgage to Yorkville Federal Savings and Loan Association (4/8/82 Venditto Letter
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to Connery, Deft. Ex. 297). The Robson Firm was later sent a copy of the closing binder that was prepared by Mr. Connery on the March 19 closing. (Weathervane Closing Binder for 3/19/82 Closing, Deft. Ex. 298; Venditto Dep., 25 Tr. 3041; Weathervane Closing Binder for 3/19/82 Closing, Deft. Ex. 285; Raíble, 23 Tr. 2738-39) Prior to the closing on the 117-acre parcel of. the Lady Gabriel estate, Mr. Ov-ermyer asked Mr. Mitchell to attempt to sell the 61-acre parcel to Mr. Teasdale “on the same terms and conditions.” (Mitchell, 2 Tr. 136-37) At the March 19 closing, Mr. Mitchell solicited an offer from Mr. Teasdale. (Mitchell, 2 Tr. 138) Mr. Teasdale offered “$715,000, all cash, close immediately.” (Mitchell, 2 Tr. 138) Mr. Overmyer accepted (Mitchell, 2 Tr. 139), and the sale of the 61-acre parcel to Mr. Teasdale for $715,000.00 (approximately $11,725.00 per acre) closed on April 15,1982, less than one week after the close of evidence in the Hadar adversary proceeding (Mitchell, 2 Tr. 141; 4/82 Weathervane Contract of Sale to Chappaqua Building Corporation and Yorkville Equities Corp., Deft. Ex. 21; 4/15/82 Weathervane Deed, Deft. Ex. 22, Hadar Adversary Proceeding Docket, 4/9/82 Entry, Deft. Ex. 310). On April 20, 1982, Mr. Connery sent to Mr. Robson a $20,000.00 check of Omega Executive Services Corp. (4/20/82 Connery Letter to Robson, Deft. Ex. 214; Robson, Miller & Osserman Second Amended Interrogatory Answers, Exhibit A, Deft. Ex. 23, p. 16) The $20,000.00 was part of the proceeds from the sale of the Lady Gabriel estate. (Carrieri, 3 Tr. 257, 262, 264-65; Weather-vane Receipts and Disbursements Journal, Deft. Ex. 26, pp. 3, 5; Omega Bank Statement and Deposit Records, Deft. Ex. 28; Omega Receipts and Disbursements Journal, Deft. Ex. 27, pp. 2,12) On May 5,1982, Mr. Robson had a conference with Mr. Ov-ermyer regarding Mr. Overmyer’s very severe personal financial problems. (Robson, 19 Tr. 2120; Robson Firm Overmyer Personal Time Slips, Deft. Ex. 115, p. 2) Mr. Overmyer was “very pessimistic about the outcome” of the Hadar adversary proceeding. (Robson, 19 Tr. 2120) On that same day, May 5,1982, the Robson Firm received three checks of Omega Executive Services Corp. in the respective amounts of $2,218.55, $15,000.00 and $15,000.00. (Robson, Miller & Osserman Second Amended Interrogatory Answers, Exhibit A, Deft. Ex. 23, p. 16) The $32,218.55 was part of the proceeds from the sale of the Lady Gabriel estate. (Carrieri, 3 Tr. 257, 262, 264; Weathervane Receipts and Disbursements Journal, Deft. Ex. 26, pp. 3, 5, 7, 9; Omega Bank Statement and Deposit Records, Deft. Ex. 28; Omega Receipts and Disbursements Journal, Deft. Ex. 27, pp. 2, 3,16) The $2,218.55 check was the payment for four of the March 19 bills sent to Mr. Overmyer personally; $176.50 for Three Elks Co., $1,085.60 for Seige, $686.45 for Kearney and $270.00 for Labriola. (Robson, 19 Tr. 2117-19; 3/19/82 Robson Bills to Mr. Overmyer, Deft. Exs. 206, 207, 208, 209) The $50,000.00 was a retainer for representing “all of the [Overmyer] entities that were going to be ... subject to the judgment, ultimately.” (Robson, 19 Tr. 2132;
accord
Robson, 19 Tr. 2129, 2130, 2133-34, 2137-38, 2141-42, 2144-45) It was the “war chest” that Mr. Overmyer was amassing for litigation against Telecasting and FNBB. (Robson New York Dep., 17 Tr. 1865) Mr. Robson was attempting to obtain money from Mr. Overmyer from any source whatsoever. (Robson, 15 Tr. 1563; Robson New York Dep., 17 Tr. 1863) Mr. Robson admitted that he knew about the constructive trust claims of Telecasting and FNBB at the time he received the $50,000.00. (Robson, 15 Tr. 1620, 1625)
9.8
The Robson Trust.
None of the proceeds of the Weathervane sale went to the Harrison M. Overmyer Trust, which owned 20 percent of Weathervane Farms, Inc. (6/20/83 Cook Hadar Adversary Proceeding Testimony, 27 Tr. 3231; 7/19/83 Cook Hadar Adversary Proceeding Testimony, 27 Tr. 3234) Mr. Overmyer caused $580,923.47 of the proceeds of the Weathervane sale to be transferred to D.H. Overmyer Company of Canada, Ltd. (Carrieri, 3 Tr. 260-62; Omega Bank Statement and Deposit Records, Deft. Ex. 28; Weathervane Receipts and Disbursements Journal, Deft. Ex. 26, pp. 1, 3, 5, 8, 9; Omega Receipts and Disbursements Journal, Deft.
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Ex. 27, pp. 1, 2, 3, 10, 14) A $165,000.00 transfer was made five days after the receipt of $170,000.00 and a $415,923.17 transfer was made one day after the receipt of the identical amount. (Omega Bank Statement, Deft. Ex. 28, p. 1) Of the $580,923.47, $177,038.56 was simply transferred back to Omega Executive Services during March, April and May 1982, as Mr. Overmyer needed it. (Omega Receipts Journal, Deft. Ex. 27, pp. 1, 2, 3) D.H. Overmyer Company of Canada, Ltd. had sold its warehouses and had no business except the transfers of money. (Edgerton, 7 Tr. 618) On May 18, 1982, Mr. Robson met with Sidney Reich, who was ultimately retained by Mr. Overmyer to handle Mr. Overmyer’s personal bankruptcy. (Robson, 12 Tr. 1242; Robson Firm Overmyer Personal Time Slips, Deft. Ex. 115, p. 9) On May 21,1982, the Friday before the May 24 closing arguments in the Hadar adversary proceeding (Robson, 12 Tr. 1243-44), Mr. Robson entered into a trust agreement with Mr. Overmyer’s daughter, Barbara Overmyer Strang, pursuant to which he agreed to hold property for the benefit of Mr. Overmyer’s four children. (Robson, 12 Tr. 1189, 19 Tr. 2145; 5/21/82 Robson Trust Agreement, Deft. Ex. 215) Mr. Over-myer directed the establishment of the trust. (Robson, 12 Tr. 1241) Mrs. Strang was reluctant to enter into the trust agreement, but Mr. Overmyer wanted to do it and eventually persuaded her to do so. (Robson, 12 Tr. 1241,15 Tr. 1574) The trust was funded with a $250,000.00 “loan” “from Barbara Overmyer Strang” that was taken out of D.H. Overmyer Company of Canada, Ltd. (Robson, 12 Tr. 1189-90, 1240-41, 19 Tr. 2114, 2145-47, 2149; 5/21/82 Promissory Note from Barbara Overmyer Strang to DHO Canada, Deft. Ex. 216; 5/21/82 Loan Agreement Between Barbara Overmyer Strang and DHO Canada, Deft. Ex. 217; 5/26/82 Caccamo Letter to Barbara Strang with 5/21/82 $250,000 Credit Advice, Deft. Ex. 218) The $250,000.00 was part of the proceeds of the Weathervane sale. (Carrieri, 3 Tr. 260-62; Edgerton, 7 Tr. 613-15; Omega Bank Statements and Deposit Records, Deft. Ex. 28; Weathervane Receipts and Disbursements Journal, Deft. Ex. 26, pp. 1, 3, 5, 7, 9; Omega Receipts and Disbursements Journal, Deft. Ex. 27, pp. 1, 2, 3, 10, 14; Edgerton Handwritten Notes on $250,000 Transfer, Deft. Ex. 61; 5/21/82 $250,000 Credit Advice, Deft. Ex. 62;
compare
5/21/82 $250,000 Credit Advice, Deft. Ex. 62,
with
5/21/82 $250,000 Credit Advice Attached to 5/26/82 Caccamo Letter to Barbara Strang, Deft. Ex. 218, p. 2) Mr. Robson took $10,000.00 out of the trust as a “fee.” (Robson, 19 Tr. 2148;
contra
Robson New York Dep., 17 Tr. 1879) The receipt of this money was concealed by Mr. Robson by omitting it from the list of “Payments Received by Robson Firms” that was filed under oath in response to an interrogatory propounded by Telecasting. (Robson, 19 Tr. 2149; Miller, 27 Tr. 3328;
cf.
Robson, Miller & Osserman Second Amended Interrogatory Answers, Deft. Ex. 23) On May 28, 1982, one week after the Robson Trust was established, Mr. Over-myer filed a personal Chapter 7 bankruptcy in the Southern District of New York, White Plains Division. (Robson, 15 Tr. 1618-19; 5/28/82 Overmyer Chapter 7 Petition, Deft. Ex. 145) Mr. Overmyer made an unsuccessful
ex parte
approach to this Court (6/21/82 Reich Letter to Judge Ray, Deft. Ex. 120) and unsuccessful
ex parte
approaches to a bankruptcy judge and two district judges in the Southern District of New York (Robson, 13 Tr. 1330-46), in an effort to use the automatic stay arising from the filing of It's personal Chapter 7 bankruptcy, to prevent this Court from rendering a decision in the Hadar adversary proceeding. Mr. Robson invested a portion of the money transferred to the Robson trust in A.T. Houlihan, Inc. (Mitchell, 2 Tr. 167) The original stock issuance agreement executed by Mr. Robson (Houlihan Stock Agreement, Deft. Ex. 342, p. 13) provided for issuance of 50 percent of the stock of A.T. Houlihan, Inc. to the Robson trust. (Houlihan Stock Agreement, para. 1(a), Deft. Ex. 342, p. 2) Mr. Overmyer later changed the agreement to provide for issuance of 50 percent of the stock to the Harrison M. Overmyer trust. (Houlihan Stock Agreement, Deft. Ex. 342, p. 1) On June 20, 1983, Howard C. Cook, the trustee
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of the Harrison M. Overmyer Trust, committed perjury before this Court to conceal the right of the Harrison M. Overmyer trust to subscribe to 50 percent of the stock of Chapoat B.C. Corporation which owned A.T. Houlihan, Inc.
(Compare
6/20/83 Cook Hadar Adversary Proceeding Testimony, 27 Tr. 3224, 3227-28,
with
7/8/83 Mitchell-Cook Telephone call Recording, 27 Tr. 3253-58,
and
7/19/83 Cook Hadar Adversary Proceeding Testimony, 27 Tr. 3234-46) Mr. Robson admitted that he knew about the constructive trust claims of Telecasting and FNBB at the time the Robson Trust was established and funded. (Robson, 15 Tr. 1620, 1625)
9.9
The Robson Mortgage.
During June 1982, Mr. Robson and the Robson Firm were working on a mandamus petition to the United States Court of Appeals for the Sixth Circuit, seeking to prevent this Court from rendering a decision in the Hadar adversary proceeding that was then under advisement. (Robson, 15 Tr. 1590-91, 1616-18, 18 Tr. 2086; Robson Firm Overmyer Personal Time Slips, 6/1/82 and 6/29/82 Robson Time Slips, Deft. Ex. 115, pp. 13, 19; Hadar Mandamus Petition, Deft. Exs. 122, 123) On June 25

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2021298. Public record. Not legal advice.