Beatrice Cheese, Inc. v. Peter J. Schmitt, Co. (In Re Peter J. Schmitt Co.)

154 B.R. 632
CourtUnited States Bankruptcy Court, D. Delaware
DecidedAugust 25, 1993
Docket19-10343
StatusPublished
Cited by5 cases

This text of 154 B.R. 632 (Beatrice Cheese, Inc. v. Peter J. Schmitt, Co. (In Re Peter J. Schmitt Co.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beatrice Cheese, Inc. v. Peter J. Schmitt, Co. (In Re Peter J. Schmitt Co.), 154 B.R. 632 (Del. 1993).

Opinion

MEMORANDUM OPINION AND ORDER

HELEN S. BALICK, Bankruptcy Judge.

Beatrice Cheese, Inc., ConAgra, Inc., and Swift-Eckrich, Inc. have moved to strike a brief filed by Peter J. Schmitt, Inc. and for sanctions. This is the court’s Opinion on the motion, which is a core matter. 28 U.S.C. § 157(b)(2)(A) & (B).

I. Facts

The procedural history of certain adversary proceedings and a related motion in Peter J. Schmitt’s Chapter 11 proceedings, and other matters of record provide the facts underlying the motion to strike and for sanctions. Schmitt and five related corporations filed Chapter 11 petitions in this court on May 29, 1992. A consolidated plan was confirmed on April 23, 1993. The order confirming the plan authorizes the Debtors to escrow in a segregated account monies to pay unpaid professional fees and expenses incurred before the plan’s effective date. On January 4, 1993, Beatrice commenced an adversary proceeding against Schmitt, seeking relief relating to Beatrice’s alleged status as an Ohio agricultural lien creditor. Within two weeks, nine other Ohio creditors alleging a similar status also commenced adversary proceedings against Schmitt and Marine Midland, N.A. 1 On March 4, Beatrice Cheese, ConA-gra and Swift-Eckrich each moved for summary judgment on its complaint. One week later, Schmitt cross-moved for summary judgment.

On March 15, Schmitt filed a motion and supporting memorandum in its Chapter 11 proceedings to estimate and value statutory lien claims of all alleged Ohio lien creditors pursuant to 11 U.S.C. § 502(c) and (d). Case No. 92-695, docket nos. 1328, 1329. The motion raised, for the most part, the identical legal issues that were being extensively briefed in connection with the cross-motions, and Schmitt requested this estimation motion be heard on March 24. The Ohio lien creditors vehemently objected to both the procedure Schmitt was attempting to employ, as well as the substance of the motion.

At the March 24 hearing, counsel for Schmitt requested a continuance of the motion. He and the court recognized that a ruling on the cross-motions would resolve the estimation motion. The court continued the estimation motion to April 22. Docket no. 1535, at 164-69.

Also on March 24, the court held a pretrial conference on the above Ohio lien adversaries. Schmitt requested an expedited briefing schedule, as well as expedited consideration from this court of the cross-motions, because the legal issue of whether the Plaintiffs possessed Ohio lien creditor status affected Schmitt’s confirmation hearing, which was scheduled for April 22. Counsel for certain of the Plaintiffs apprised the court that additional Ohio creditors wished to participate in the briefing on this issue. The parties also wished to consolidate the adversary proceedings.

At the time of this conference, only the reply briefs were due in the three adversaries where cross-motions for summary judgment had been filed. This court allowed the filing of additional adversary proceedings and summary judgment motions raising the same legal issues, agreed the adversaries should be consolidated, and ordered that any additional briefing by any of the Ohio Plaintiffs was due April 2. Schmitt’s reply to these briefs was due April 5. Finally, the court ordered that all additional briefs should be substantively coordinated, and specifically admonished counsel that briefs to be filed by parties with similar interests should not be duplica-tive of each other or of previously filed briefs. The court stated it would consider imposing appropriate sanctions if these admonitions were not heeded.

*634 During the ensuing weeks, the briefs of the parties were timely filed, and this court shortly thereafter issued a Memorandum Opinion and Order resolving the cross-motions. That Opinion ruled that Schmitt could avoid an unperfected lien pursuant to 11 U.S.C. § 545, and that as of the date of Schmitt’s Chapter 11 petition, the Ohio creditors’ liens were unperfected under Ohio law. Beatrice Cheese, Inc. v. Peter J. Schmitt (In re Peter J. Schmitt), 154 B.R. 47 (Bankr.D.Del.1993).

II. Discussion

The day after Schmitt filed its “Closing Omnibus Answering and Reply Brief,” A-93-8, docket no. 30 (hereinafter reply brief), three of the Ohio creditors, Beatrice Cheese, ConAgra and Swift-Eckrich, filed their motion to strike the reply brief and for sanctions. The motion to strike the reply brief can be disposed of summarily. As the April 16 Opinion indicated, all briefing was fully considered.

A. Standard and Scope of Review on the motion for sanctions

The Ohio creditors’ alternative motion, the motion for sanctions, alleges Schmitt violated the court’s March 24, 1993 order prohibiting duplication of written argument and requests the court bar the payment by the consolidated estates of any counsel fees and costs incurred by Schmitt’s counsel in the preparation of the reply brief. See, e.g., In re Heck’s Properties, Inc., 151 B.R. 739 (S.D.W.Va.1992) (discussing inherent power of court to impose sanctions). In ruling upon this request, it is appropriate to describe the twofold purpose of the order prohibiting duplication. First, the court was concerned about ruling upon the cross-motions within an expedited time frame. A significant volume of briefing was already before the court in connection with the issues raised by the cross-motions, and therefore it was appropriate to minimize additional briefing.

Second, the court sought to deter wasteful lawyering, which benefits no one, and in the case of court-approved professionals, unjustifiably depletes the debtors’ estates. Since Schmitt’s counsel (Skadden, Arps, Slate, Meagher & Flom) were retained pursuant to 11 U.S.C. § 327(a), this latter concern specifically applies to them.

In connection with that retention, there exists a well-developed standard that applies regardless of whether Schmitt’s counsel violated the non-duplication order. The court may award to professionals “reasonable compensation for actual, necessary services rendered by such ... attorney, ... and by any paraprofessional persons employed by such ... attorney_” 11 U.S.C. § 330(a)(1) (emphasis added). The bankruptcy court has an independent obligation to ensure that the requirements of section 330(a) have been satisfied before awarding compensation thereunder. In re Continental Airlines, 150 B.R. 334, 340 (D.Del.1993); In re Columbia Gas System, 150 B.R. 553 (Bankr.D.Del.1992) (sua sponte reducing approved expenses from $58,134 to $10,000).

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Bluebook (online)
154 B.R. 632, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beatrice-cheese-inc-v-peter-j-schmitt-co-in-re-peter-j-schmitt-co-deb-1993.