Compton Impressions, Ltd. v. Queen City Bank, N.A.

OVERVIEW

Compton Impressions, Ltd. (“Compton” or “the Debtor”) obtained a $2,375,000 construction loan from Queen City Bank, N.A., Cerritos Valley Bank, and Pacific Business Bank (collectively, “the Banks”) to develop a residential real estate project in Compton, California, but defaulted on the loan when the unpaid balance was $1,723,165. Compton filed for Chapter 11 reorganization in Bankruptcy. The Banks agreed to two cash-collateral stipulations to allow Compton to complete the project and attempt to sell the residential units. To assist in that endeavor, Compton employed the services of Rutter, Hobbs & Davidoff (“RH & D”) as its law firm, and The Kaleson Group (“Kaleson”) as its sales and marketing company, (collectively, “the Debtor’s professionals”). Toward the end of the completion and sales endeavor, the Debtor brought a motion to surcharge the Banks for services rendered and expenses incurred by the RH & D law firm and by Kaleson, the sales and marketing company. The bankruptcy court denied the surcharge motion, except to the extent of $10,000 in attorney fees and costs. The Debtor appealed the bankruptcy court’s denial, and the Banks cross-appealed the $10,000 award,…