Lawyers’ Fees In Schweitzer Case Melt Away Judge In Bankruptcy Proceedings Finds Billings Excessive, And Says So

Lawyers for former Schweitzer Mountain Resort owners Bobbie Huegenin and Jean Brown will only get a fraction of the attorneys fees they’ve requested from U.S. Bankruptcy Court.

In a frank and sometimes scathing ruling, Judge Jim D. Pappas recently decided that the attorneys don’t deserve even half the money they’ve requested.

Altogether, the court authorized that the attorneys, from three separate firms, would be compensated $244,149 for their work on behalf of Huegenin and Brown. That’s a 54 percent cut from the $532,795 the attorneys billed.

Taking the biggest cut was Goldstein & Monello, P.C. of Boston, which was the debtors’ lead counsel in the Schweitzer Mountain bankruptcy case. The firm had petitioned the court for $420,720 in compensation and $39,191 in expenses.

Because Huegenin and Brown were unable to pay their debts, the attorneys were attempting to be compensated from the sale of the company’s assets - money that’s intended to pay back the resort’s many creditors.

Pappas ruled that Goldstein & Monello’s hourly rate, $350 for partners and $200 for less experienced associates, was excessive.

In a stab at the East Coast attorneys, Pappas wrote, “Some of the most effective and persuasive advocacy for the debtors observed by the Court in these cases came from its Idaho lawyer, Mr. (Kim) Trout, who indicates his fees should be worth $125 per hour.”

Brown and Huegenin are members of the Brown family, which owned Schweitzer Mountain Resort since its founding in the ‘60s. When the resort was unable to pay its debts in 1996, the owners asked the court to appoint a receiver, former resort attorney Ford Elsaesser, to run the mountain and find buyers.

When Harbor Properties Inc., of Seattle, made an $18 million offer to purchase the mountain in 1997, Huegenin and Brown objected and filed for bankruptcy to stop the sale.

Huegenin and Brown attempted for more than a year to come up with a plan to reorganize and save the resort from liquidation, but were unable to find an investor considered credible by the court.

Pappas described the reorganization plans as “hypothetical reorganizations at best, and strategic gamesmanship at worst.”

They also filed lawsuits against U.S. Bank and Elsaesser seeking to recover damages for breach of contract, breach of duty and other causes.

“To the court, much of this litigation seems somewhat pointless and has increased the costs to the parties of these proceedings,” Pappas wrote. “The debtors’ struggle to stave off liquidation accomplished little, save increased expenses.”

Some of the filings were designed simply to buy time.

Pappas also criticized the lead counsel’s decision to file the bankruptcy proceedings in Eastern Washington, which required the services of a Washington attorney. That attorney continued to bill for his time after the venue was changed to Idaho, and Pappas refused to reimburse those costs.

Meanwhile, the assets continue to be sold off. The resort was sold to U.S. Bank on an $18 million credit bid in early December, and the bank turned around and sold it to Harbor Properties for nearly the same amount, according to sources close to the sale.

Still left to liquidate are some properties in Idaho and Montana, Elsaesser said. He is still being paid under the receivership through the sale of the resort.

“I’m hoping to wrap all additional matters up so the continuation of professional fees will come to a close,” he said.