In re: Adam T. Lalone

CourtUnited States Bankruptcy Court, W.D. Michigan
DecidedJanuary 29, 2025
Docket24-03064
StatusUnknown

This text of In re: Adam T. Lalone (In re: Adam T. Lalone) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re: Adam T. Lalone, (Mich. 2025).

Opinion

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF MICHIGAN

In re: Case No. 24-03065-swd ADAM T. LALONE, Hon. Scott W. Dales Chapter 12 Debtor. _____________________________________/

MEMORANDUM OF DECISION AND ORDER

PRESENT: HONORABLE SCOTT W. DALES Chief United States Bankruptcy Judge

I. INTRODUCTION

A blueberry farmer and his wholly owned limited liability company each filed a chapter 12 bankruptcy petition, and each sought an order under 11 U.S.C. §§ 327(a) and 1203 approving retention of the same attorney to represent them as debtors in possession in their respective, related but not consolidated, cases.1 The United States Trustee ("UST") objected to the proposed retention in both cases. The court held a hearing on January 22, 2025, in Kalamazoo, Michigan, which proposed counsel, James Oppenhuizen, Esq., and counsel for the United States Trustee attended. After argument, and without any request to conduct an evidentiary hearing, the court took the Applications under advisement. For the following reasons, the court will deny both. II. JURISDICTION AND AUTHORITY The court has jurisdiction to consider the Applications under 28 U.S.C. § 1334(a) and (e)(2). Resolving disputes about the retention of bankruptcy professionals lies at the core of the

1 Debtor Adam T. Lalone (the "Debtor") filed Debtor's Application for Entry of an Order Authorizing Employment and Retention of Oppenhuizen Law Firm, PLC, as Counsel to Debtor (the "Lalone Application," ECF No. 20). Mr. Lalone, as sole member of Blue Harvest Farms, LLC, also filed a similar application on behalf of Blue Harvest Farms, LLC (the "Blue Harvest Application," ECF No. 27 in Case No. 24-03064, and with the Lalone Application referred to as the "Applications"). For convenience, the court will refer to Blue Harvest Farms, LLC as "Blue Harvest." bankruptcy court's authority under 28 U.S.C. § 157(b)(2)(A) and the reference from the United States District Court under L.Gen.R. 3.1(1) (W.D. Mich.) and 28 U.S.C. § 157(a). Congress has invested the UST, as "watchdog," with statutory standing to challenge the Applications. 11 U.S.C. § 307; Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d

498, 500 (6th Cir. 1990) (United States Trustee acts as "watchdog"). Initially, the court notes that after Blue Harvest filed the Blue Harvest Application, the court dismissed the company's chapter 12 case pursuant to stipulation, essentially for failure to document adequate insurance. The UST and Mr. Oppenhuizen agree that the dismissal does not moot the Blue Harvest Application, largely because Mr. Oppenhuizen's right to compensation for his work on Blue Harvest's behalf likely depends (inside or outside of bankruptcy) on his getting appointed under 11 U.S.C. § 327(a)2 in the first place. Michel v. Federated Dep't Stores, Inc. (In re Federated Dep't Stores, Inc.), 44 F.3d 1310, 1320 (6th Cir. 1995); Dery v. Cumberland Casualty & Surety Co. (In re 5900 Assocs., Inc.), 468 F.3d 326, 330 (6th Cir. 2006) (claim of attorney appointed as counsel to chapter 11 debtor in possession was unenforceable post-bankruptcy

because bankruptcy court did not approve the claim under § 330(a)); cf. Bingham Greenebaum Doll LLP v. Glenview Health Care Facility, Inc. (In re Glenview Health Care Facility, Inc.), 620 B.R. 582, 585 (B.A.P. 6th Cir. 2020) (dissolution of creditors' committee did not moot appeal from denial of counsel's appointment application given the relationship between appointment and compensation, even though dissolved committee no longer required representation). The court finds that dismissal of the Blue Harvest case does not render the Blue Harvest Application moot, given Mr. Oppenhuizen's pecuniary interest in getting appointed and, ultimately, paid in one forum or another.

2 References to "Bankruptcy Code" or to specific statutory sections are to 11 U.S.C. §§ 101-1532, unless otherwise indicated. III. ANALYSIS The attorney-client relationship in bankruptcy is subject to both state and federal regulation. State and federal law both respect a client's choice of counsel, supplanting that choice only in cases of conflict, overreach, or other significant policies. Cf. 28 U.S.C. § 1652 ("The laws

of the several states, except where … Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply."). When debtors in possession, such as Mr. Lalone and Blue Harvest, seek approval of their choice of counsel to represent them not merely as debtors, but as debtors in possession (a term of art), the federal bankruptcy interest arises. Congress has expressed its policy choices in this area in several ways. First, Congress has invested chapter 12 debtors in possession with many of the rights and powers of a chapter 11 trustee. 11 U.S.C. § 1203. Second, because a chapter 11 trustee may retain professionals (including counsel) under § 327(a) to advise in meeting the trustee's obligations to the bankruptcy estate and carrying out the duties that Congress has assigned to the chapter 11

trustee, a chapter 12 debtor in possession may likewise retain counsel under that section. Section 327(a) provides as follows: (a) Except as otherwise provided in this section, the trustee, with the court's approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this title.

11 U.S.C. § 327(a). This provision has a dual aspect: the proposed professional must not "hold or represent an interest adverse to the estate," and he or she must qualify as a "disinterested person" -- another term of art under the Bankruptcy Code. The term "disinterested person" means, in relevant part, someone who: … does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason.

11 U.S.C. § 101(14)(C).3 Courts have recognized considerable "overlap" between the twin prongs of § 327(a) and the definition of "disinterested person" in § 101(14). See, e.g., In re BH & P, Inc., 949 F.2d 1300, 1314 (3rd Cir. 1991).

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