DeVore v. Marshack (In Re DeVore)

223 B.R. 193, 98 Cal. Daily Op. Serv. 6405, 98 Daily Journal DAR 8917, 1998 Bankr. LEXIS 1013, 1998 WL 493906
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedJuly 31, 1998
DocketBAP Nos. CC-97-1836-BOvH, CC-97-1837-BOvH, Bankruptcy No. SA 93-21869-LR
StatusPublished
Cited by56 cases

This text of 223 B.R. 193 (DeVore v. Marshack (In Re DeVore)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DeVore v. Marshack (In Re DeVore), 223 B.R. 193, 98 Cal. Daily Op. Serv. 6405, 98 Daily Journal DAR 8917, 1998 Bankr. LEXIS 1013, 1998 WL 493906 (bap9 1998).

Opinion

*195 OPINION

BRANDT, Bankruptcy Judge.

Debtor appeals two related bankruptcy court orders, the first denying her motion for an order directing the Chapter 7 trustee to release state court litigation proceeds, and the second approving fees for special counsel’s services in the state court litigation. We REVERSE both orders and REMAND the former for further proceedings in accordance with this disposition.

FACTUAL BACKGROUND

Appellant-Debtor Linda Ballard DeVore (“DeVore” or “Debtor”) filed a petition for relief under Chapter 7 2 on 1 November 1998. Richard Marshack (“Marshack” or “trustee”) was appointed Chapter 7 trustee. Among the assets listed in DeVore’s Schedule B was a cause of action filed in Los Angeles County Superior Court, Linda Ballard DeVore v. Trans Union Corporation, et al., Case No. BC077839 (“state court litigation”).

By order dated 16 September 1994, the trustee was authorized to employ Jeffrey Virden (“Virden”) as special counsel to the trustee to represent the estate in the state court litigation. The order provides that Vir-den is to “receive 33)é% of any amounts (including principal, interest, costs or attorneys’ fees) from settlement, award, judgment or other recovery from the State Court Action.”

DeVore moved from her Orange County, California residence in October of 1994 and currently resides in Tacoma, Washington. She filed a change of address with the bankruptcy court on 22 September 1997.

On 12 July 1996, after jury trial in the state court litigation, a judgment of $15,000 plus costs was entered in favor of the plaintiff-debtor against defendant Bank of America. On 31 October 1996, Marshack filed a Trustee’s Report of No Assets, and an order closing the case was entered the following day.

DeVore contacted the trustee’s office in January of 1997 to inquire as to why the case had been closed. The individual who answered her call told her the trustee had closed the case because he did not believe it was economical to administer the judgment against the Bank of America. DeVore also contacted Virden, who told her the trustee had abandoned the judgment. Subsequently, believing that she would be the recipient of the litigation proceeds, DeVore promised payment to Schick Moving and Storage Company for storage of items for which $11,-031.77 was past due. Schick agreed to fore-go its right to foreclose based on DeVore’s promise of payment.

As a result of Virden’s collection efforts, Bank of America issued a check on 23 June 1997 for $18,652.00, made payable to Jeffrey W. Virden, Esq., Linda Ballard DeVore, and Richard A. Marshack, Trustee. Virden forwarded the check to DeVore, who signed and returned it to Virden. Virden then signed the check and forwarded it to Marshack on 18 July 1997.

By letter to the court dated 4 August 1997, DeVore indicated her new counsel to be Robert J. Anderson (“Anderson”) and provided his address. In the letter, DeVore stated, “[i]f there are any motions to reopen the case or for other relief, we wish the opportunity to oppose the motions.” The “cc:” notation at the bottom of the letter indicates a copy was sent to Marshack, Anderson, and Virden.

On 12 August 1997, the trustee filed and served a motion to reopen the case to administer the award from the state court action. The motion was served on the U.S. Trustee, DeVore, and DeVore’s former attorney, Joseph A. Weber, who had withdrawn from the case on 30 August 1994. Two copies were mailed to DeVore at two different Yorba Linda addresses, her respective residence and business addresses of record.

DeVore did not file an objection to the trustee’s motion to reopen, and neither she nor Anderson appeared at the hearing on 2 September 1997. That day the court orally *196 granted the trustee’s motion, and a written order reopening the case and withdrawing the Trustee’s No Asset Report was entered and served on DeVore’s addresses of record on 19 September 1997. The order did not expressly refer to the judgment against Bank of America or to the proceeds of that judgment.

Prior to entry of the written order, on 9 September 1997, Anderson spoke with trustee’s counsel, Thomas Casey (“Casey”). At that time, Casey informed Anderson that a motion to reopen had been filed and an order had been signed. Two days later, Anderson went to the Santa Ana bankruptcy clerk’s office and requested a copy of the order; he was told the file was not there and was referred to the Laguna Niguel office.

On 22 September 1997, the trustee filed a Notification of Asset Case, and, on 29 September 1997, a Notice of Possible Dividend and Order Fixing Time to File Claims was issued by the clerk.

On 7 October 1997, Virden filed an application for fees of $6,217.33 and costs of $1,971.88 incurred in connection with the state court litigation pursuant to the contingency agreement previously approved by the court. DeVore timely filed an objection to Virden’s fee application.

On 9 October 1997, DeVore filed a “Motion for a Court Order Pursuant to 11 U.S.C. § 725 (or other statute) Directing Trustee Richard Marshack to Release the State Court Litigation Proceeds and For Findings.” The trustee timely filed an objection to this motion.

Virden’s fee application and DeVore’s motion were both heard by the court on 28 October 1997. At the hearing, the court denied DeVore’s motion for release of litigation proceeds and approved Virden’s fees. DeVore timely filed notices of appeal of both orders.

ISSUES

A. Whether the trustee’s motion to reopen was properly served on debtor.

B. Whether the order reopening the case and withdrawing the no asset report was effective to bring the litigation proceeds back into the estate.

C. Whether the court’s denial of debtor’s motion for release of proceeds was an abuse of discretion.

D. Whether the award of final fees to special counsel in the state court litigation and authorization of payment from the state court litigation proceeds was an abuse of discretion.

STANDARD OF REVIEW

The bankruptcy court’s conclusions of law are reviewed de novo, and its findings of fact are reviewed under the clearly erroneous standard. In re Johnston, 49 F.3d 538, 540 (9th Cir.1995). A bankruptcy court necessarily abuses its discretion if it bases its decision on an erroneous view of the law or clearly erroneous factual findings. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2461, 110 L.Ed.2d 359 (1990).

On appeal, a bankruptcy court’s award of attorneys’ fees will not be disturbed absent a finding that the court abused its discretion or erroneously applied the law. In re Reimers, 972 F.2d 1127

Free access — add to your briefcase to read the full text and ask questions with AI

Related

McGee-Weiss v. Parker, II
S.D. Florida, 2025
Carey Macon
S.D. Georgia, 2025
In re: Deepa B. Willingham
Ninth Circuit, 2024
Bank of New York v. Kogut
2023 IL App (1st) 210886-U (Appellate Court of Illinois, 2023)
Robin Blount
D. New Jersey, 2020
In re: Afshin Tadayon
Ninth Circuit, 2019
In re Carvalho
578 B.R. 1 (District of Columbia, 2017)
In re Wright
566 B.R. 457 (Sixth Circuit, 2017)
In re: Wayne Wright
Sixth Circuit, 2017
In re Haber
547 B.R. 252 (S.D. Ohio, 2016)
Travers v. Bank of America, N.A. (In re Travers)
507 B.R. 62 (D. Rhode Island, 2014)
In re Sas
488 B.R. 178 (D. Nevada, 2013)
In re: Joel DeGroot v.
Sixth Circuit, 2012
In re DeGroot
484 B.R. 311 (Sixth Circuit, 2012)
Just Film, Inc. v. Merchant Services, Inc.
873 F. Supp. 2d 1171 (N.D. California, 2012)
In re: Jimmie Earl Stephen
Ninth Circuit, 2012

Cite This Page — Counsel Stack

Bluebook (online)
223 B.R. 193, 98 Cal. Daily Op. Serv. 6405, 98 Daily Journal DAR 8917, 1998 Bankr. LEXIS 1013, 1998 WL 493906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/devore-v-marshack-in-re-devore-bap9-1998.