Clifton Capital Group, LLC. v. Sharp

“The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence…” Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167 (2000).

When East Coast Foods (ECF) filed for bankruptcy, Sharp was appointed trustee and Clifton was named chair of the committee of unsecured creditors monitoring ECF. Sharp’s fee application requested the maximum amount allowed under 11 U.S.C. § 326(a), $1,155,844.71 (the lodestar plus a 65% enhancement). Clifton claimed that the fee cap was not “presumptively reasonable” because the enhancement was unsupported. The bankruptcy court disagreed because the results “were truly exceptional,” and the district court affirmed the findings. Clifton appealed the district court’s decision, arguing the excessive fees resulted in an injury because they were supposed to be paid in full before distribution to unsecured creditors. Sharp argued that the alleged injury was too conjectural and hypothetical, meaning Clifton lacked standing, because there was no diminished likelihood that Clifton would be fully paid. “The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence…” Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167 (2000). The Court found that Clifton’s injury did not constitute an injury establishing standing because the bankruptcy plan proposed paying all allowed claims in full and Clifton was guaranteed 100% payment of its alleged claim. The delay of Clifton’s payment also did not constitute an injury because Clifton always knew the timeline would depend on amounts owed to other claimants.  REVERSED.