By Daniel Gill
Jack Johnson, a defenseman for the NHL’s Columbus Blue Jackets, was awarded more than $500,000 for attorneys’ fees and punitive damages stemming from his Chapter 11 bankruptcy case.Judge John E. Hoffman Jr., of the U.S. Bankruptcy Court for the Southern District of Ohio, previously found that RFF Family Partnership LP, which loaned Johnson more than $1.8 million, violated the automatic stay in bankruptcy, which prohibits creditors from trying to collect debts while a case is ongoing.
This latest opinion awarded attorneys’ fees and expenses of about $422,000 and punitive damages in the amount of $100,000.
RFF loaned money to Johnson in 2014, taking a note for more than $1.8 million. The note was signed by Johnson on his behalf and on behalf of a limited liability company he managed, and by Johnson’s parents.
Johnson granted RFF a lien on his salary payments under his NHL contract, and his parents granted a lien on their 2008 Ferrari. The parents weren’t obligated to pay on the note.
In September, 2014, RFF commenced an arbitration to collect on the note. Among other things, RFF alleged that Johnson and his LLC and parents committed fraud. On Oct. 7, 2014, Johnson filed for Chapter 11. Filing for bankruptcy imposes an automatic stay under the Bankruptcy Code, which halts all judicial proceedings against the debtor or its property. A party must get court permission to lift the automatic stay in order to proceed with an action against the debtor or property of the bankruptcy estate.Despite the stay, RFF went through with the arbitration. Johnson’s lawyers wrote a cease and desist letter and filed a motion to enforce the stay, but RFF failed to heed those. It won the arbitration and got the award confirmed by a state court judgment. The court found that RFF’s behavior outside of the bankruptcy proceedings warranted the admittedly large amount of attorneys’ fees awarded. The court found the award was reasonable because RFF opposed Johnson’s attorneys at every turn as they attempted to resolve the matter and to conduct discovery necessary for awarding fees. Moreover, RFF turned down a generous offer made by the debtor, that it would forgo seeking any fees if RFF merely agreed that it wouldn’t use the arbitration award and judgment in any way to collect against Johnson or the bankruptcy estate.
RFF refused, apparently hoping that it could use the awards in ongoing litigation between the parties in the bankruptcy case. The court noted that Johnson’s lawyers warned RFF at least three times that it was violating the stay.Jack Johnson was represented by Daniel A. DeMarco, Cleveland; and Mark J. Kessler, Hahn Loeser & Parks LLP, Columbus, Ohio; Jeffrey M. Levinson, Cleveland, represented RFF Family Partnership, LP.
The case is In re Johnson , 2018 BL 56764, Bankr. S.D. Ohio, 14-57104, 2/15/18 .
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