Monteleone & McCrory v. Merrill Lynch Business Financial Services, Inc.
Opinion
Lead Opinion
MEMORANDUM **
Chapter 7 Debtor and contractor, Colt Engineering Inc., (“Colt”) provided labor and materials on several bonded construction projects. When subcontractors brought mechanic’s liens claiming that Colt had failed in payment, Ulico Casualty Company (“Ulico”), Colt’s bond surety, made payment to all laborers and materi-almen.
The law firm Monteleone & McCrory (“M & M”) represented Colt in litigation *600 over the projects, and was appointed special counsel for the Trustee during Colt’s bankruptcy proceedings, ultimately helping Colt and the Trastee reach settlement agreements with the project owners. In the underlying Chapter 7 adversary proceedings, the Bankruptcy Court ruled that Ulico was directly entitled to its bond payment amounts from the settlement proceeds under a theory of subrogation, and that the Trustee had no right or claim to the settlement funds.
M & M now appeals the District Court’s affirmance of the Bankruptcy Court’s Orders: (1) denying M & M’s motion for relief from automatic stay; (2) granting Ulico’s motion for turnover of funds; and (3) granting Ulico’s motion for disbursement of funds held in California Superior Court.