Dzikowski & Walsh v. Westwood Community

• Court: Court of Appeals for the Eleventh Circuit
• Decided: April 12, 2006
• Docket: 05-13753
• Status: Unpublished

Opinion

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT April 12, 2006 No. 05-13753 THOMAS K. KAHN Non-Argument Calendar CLERK

D. C. Docket Nos. 04-61424-CV-AJ 97-22293 BKC-PG

IN RE:

WESTWOOD COMMUNITY TWO ASSOCIATION, INC.,

Debtor. __________________________________________________________________

DZIKOWSKI & WALSH,

Plaintiff-Appellant,

versus

JOHN P. BARBEE, as Trustee for WESTWOOD COMMUNITY TWO ASSOCIATION, INC.,

Defendant-Appellee. Appeal from the United States District Court for the Southern District of Florida

(April 12, 2006)

Before DUBINA, CARNES and PRYOR, Circuit Judges.

PER CURIAM:

Once again we are called upon to consider an appeal of an issue in this case.

The question we must consider is whether the district court correctly affirmed the

bankruptcy court’s denial of fees sought and disgorgement of interim fees paid to

Dzikowski & Walsh, P.A. (“DZ Firm”). The district court’s order affirming the

bankruptcy court’s ruling was based on a finding that the Trustee did not have the

power to levy a special assessment against the property of non-debtor third-party

homeowners to satisfy general unsecured claims against Westwood Community

Two Association, Inc. (“Debtor”). The DZ Firm was paid with funds derived from

the special assessment that were neither property of the Debtor’s estate nor the

proceeds thereof and, therefore, as a professional retained by the Debtor, the

district court held that the DZ Firm had no right to be paid from such fund.

In a bankruptcy appeal, we review the bankruptcy court’s factual findings

for clear error, and the bankruptcy and district courts’s conclusions of law de

2 novo. In re A.W. Assocs., Inc., 136 F.3d 1439, 1441 (11th Cir. 1998). The award

or denial of attorney’s fees in bankruptcy cases is reviewed for an abuse of

discretion, and the underlying findings of fact are reviewed for clear error. See in

re Celotex Corp., 227 F.3d 1336, 1338 (11th Cir. 2000). A bankruptcy court’s

finding under 11 U.S.C. § 330(a) concerning whether services provided by

counsel were necessary is a factual one that is reviewed for clear error, a “very

high standard, and one [an appellate court] would rarely be likely to find,

especially in a fees situation.” In re Hillsborough Holdings Corp., 127 F.3d 1398,

1401 (11th Cir. 1997).

After reviewing the record and reading the parties’ briefs, we affirm the

district court’s order affirming the bankruptcy court’s disgorgement of fees

because the DZ Firm had no right to keep the interim fees it received which it

derived from funds that were not property of the estate, but instead were the

proceeds of an improper assessment against non-debtor property. We also affirm

the district court’s order because, in agreeing to be retained in this Chapter 7 case,

the DZ Firm assumed the risk of non-payment and disgorgement of fees paid on an

interim basis if the estate turned out to be insolvent. The record is uncontroverted

that at the time of the petition date, the total value of the Debtor’s estate was

$200.00. We also conclude that the district court correctly rejected the DZ Firm’s

3 meritless argument that the bankruptcy court lacked jurisdiction to order

disgorgement. The district court correctly held that interim fee awards, like those

made here to the DZ Firm, are always subject to modification or revision on final

application. In re Evangeline Ref. Co., 890 F.2d 1312, 1321 (5th Cir. 1989). The

district court also correctly recognized that a federal court always has jurisdiction

to determine its own jurisdiction. See United States v. Ruiz, 536 U.S. 622, 628

(2002). That means a federal court can vacate and undo prior orders once it

determines it has no jurisdiction to act. That is essentially what the bankruptcy

court did here.

Finally, we conclude that the district correctly rejected the DZ Firm’s

argument that the disgorgement of fees paid constituted an improper restitution

award to the Westwood homeowners. Accordingly, for the above-stated reasons,

we affirm the district court’s order affirming the bankruptcy court.

AFFIRMED.