NEW ULM - Senior Judge Bruce W. Christopherson took a plaintiff motion under advisement Tuesday during a hearing in a lawsuit involving the sale of SBM investment certificates.
The motion requested additional attorney's fees.
Former Brown County District Court Judge John R. Rodenberg signed an amended order on Jan. 16, 2012 in the case that originally sought $62,000 due on the investment certificates.
The amended order read "plaintiff may seek fees and costs on motion duly noted, although the Court's interpretation of the agreement between counsel is that is was very clear that the matter was being settled for $39,000 and no more."
Representing The Estate of Florence C. Swanker, Mankato attorney Daniel Bellig said he received a $39,000 check from the defendants, Laurie A. Braulick and Investment & Insurance Services of New Ulm, Ltd. but he's holding it.
"We believe it's in bad faith.... I've submitted time sheets for $7,000 in attorney's fees," Bellig said. "There is really a big equity issue here. It's unfair and unjust to ignore more expenses."
New Ulm attorney Michael Boyle, representing Braulick, said attorney's fees were awarded according to the contract and statute.
"There has been a misrepresentation about what the case was about. It's about confidentiality. All about confidentiality," Boyle said. "The judge ruled the proceedings were open. Confidentiality prevented the settling of his case in the past. The plaintiffs are asking for costs for actions they brought. The Court ruled that moot and ruled the case be settled for $39,000 and no more."
Boyle said he opposed paying pre-judgment interest.
"If the defendants feel this is moot, why don't they withdraw their confidentiality motion?" asked Bellig.
Boyle said confidentiality was the original issue. After the settlement was made, the plaintiff's attorney started asking for more money.
Christopherson asked if out-of-pocket motion filing costs would be in order.
"Absolutely not," Boyle said.
Christopherson said he would take the matter under advisement.
SBM Certificate Company, SBM Investment Certificates, 1st Atlantic Guaranty Corp., and Geneva Capital Partners, LLC, all of which are owned and controlled by Eric M. Westbury of Silver Spring, MD., were sued by the Securities and Exchange Commission (SEC) in 2006.
The suit alleged that the firms did not maintain minimum cash reserves or qualified investments to cover $33 million in face amount certificates held by more than 2,000 investors.
A federal judge froze the accounts in 2007, so investors were unable to cash in certificates as they became due.
(Fritz Busch can be e-mailed at fbusch@nujournal.com).