Bankruptcy-Sanctions

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7^th Circuit Court of Appeals

Case Name: Fidelity and Deposit Company of Maryland v. TRG Venture Two, LLC

Case No.: 22-1724

Officials: Scudder, Kirsch, and Jackson-Akiwumi, Circuit Judges.

Focus: Bankruptcy-Sanctions

A bankruptcy court found a creditor, Fidelity and Deposit Company, in clear contempt of its plan confirmation order and imposed sizeable sanctions of $9.5 million. The district court upheld the decision. Fidelity appeals, seeking to avoid paying the sanctions for its conduct. Fidelity’s actions arose out of a commercial transaction following complex bankruptcy proceedings that spurred parallel litigation in state court. The bankruptcy court undertook a careful and detailed analysis in finding Fidelity in contempt of its order and assessing sanctions based on the costs Fidelity’s conduct caused a third party to incur.  The bankruptcy court correctly examined TRG’s evidence of its costs arising directly from its efforts to fend off Fidelity’s indemnity claims. The bankruptcy court then calculated actual damages incurred in, related to, or as a direct result of state court lawsuits; the costs incurred in maintaining the properties during the state court litigation; and the lost value due to TRG’s delayed ability to sell the properties. The court made no errors in assessing TRG’s costs at $9.5 million.

Affirmed.

Decided 03/03/23

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