In re Bechuck

472 B.R. 371, 2012 WL 1144611, 2012 Bankr. LEXIS 1459
CourtUnited States Bankruptcy Court, S.D. Texas
DecidedApril 4, 2012
DocketNo. 11-39537-H4-7
StatusPublished
Cited by8 cases

This text of 472 B.R. 371 (In re Bechuck) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Bechuck, 472 B.R. 371, 2012 WL 1144611, 2012 Bankr. LEXIS 1459 (Tex. 2012).

Opinion

MEMORANDUM OPINION ON THIS COURT’S DENIAL OF THE CHAPTER 7 TRUSTEE’S APPLICATION TO EMPLOY ADAIR & MYERS, P.L.L.C.

[Docket No. 22]

JEFF BOHM, Bankruptcy Judge.

I. Introduction

The Court writes this Memorandum Opinion on what has heretofore generally been a relatively routine request from a Chapter 7 trustee: namely, an application to employ counsel. The Court has heretofore been willing to approve fairly generic applications to employ such as the one presently pending in the case at bar. The Court, however, is no longer willing to do so.

On February 6, 2012, Randy Williams, the Chapter 7 Trustee (the Trustee) for the estate of Stephan Bechuck (the Debt- or), filed an application to employ Adair & Myers, P.L.L.C., (the Firm) pursuant to 11 U.S.C. § 3271 (the Application) [Doc. No. 22]. The Application specifically identifies two of the Firm’s attorneys who will represent the Trustee: Thomas W. Graves (Graves) and Marc Douglas Myers (Myers). Upon review of the Application, the Court concludes that it should be denied without prejudice to refiling. This Court finds that the Application is inadequate because it fails to include sufficient detail regarding the proposed attorneys’ [374]*374qualifications. This Memorandum Opinion will outline the relevant factors that must be included in a trustee’s application for employment.

II. Conclusions of Law

A. Jurisdiction, Venue, and Constitutional Authority to Sign a Final Order

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and the general “catch-all” language of 28 U.S.C. § 157(b)(2). See In re Southmark Corp., 163 F.3d 925, 930 (5th Cir.1999) (“[A] proceeding is core under section 157 if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case.”); De Montaigu v. Ginther (In re Ginther Trusts), Adv. No. 06-3556, 2006 WL 3805670, at *19 (Bankr.S.D.Tex. Dec. 22, 2006) (holding that a matter may constitute a core proceeding under 28 U.S.C. § 157(b)(2) “even though the laundry list of core proceedings under § 157(b)(2) does not specifically name this particular circumstance”). Venue is proper pursuant to 28 U.S.C. § 1408(1).

Having concluded that this Court has jurisdiction over this matter, this Court nevertheless notes that Stern v. Marshall, — U.S. -, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. Therefore, this Court has a duty to constantly inquire into its constitutional authority to enter a final order for any matter brought before this Court.

In the first instance, this Court concludes that its denial of the Application is not a final order because the denial is without prejudice to the refiling of another application seeking approval of the Firm that includes the information discussed in this Memorandum Opinion. See WMX Technologies, Inc. v. Miller, 104 F.3d 1133, 1136-37 (9th Cir.1997) (holding that “when a district court expressly grants leave to amend, it is plain that the order is not final”) (citing Anastasiadis v. S.S. Little John, 339 F.2d 538, 539-40 (5th Cir.1964) (noting a dismissal with leave to amend is not a final appealable order)). Hence, this Court has the constitutional authority to enter the order denying the Application because this order is an interlocutory order.

Alternatively, even if the order denying the Application is somehow a final order, this Court nevertheless concludes that it has the constitutional authority to enter the order. The Court arrives at this conclusion because the facts in Stem are entirely distinguishable from those in the case at bar. In Stem, the debtor’s counterclaim was based solely on state law; there was no Bankruptcy Code provision undergirding the counterclaim. Id. at 2611. Moreover, the resolution of the counterclaim was not necessary to adjudicating the claim of the creditor. Id. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final judgment on the debtor’s counterclaim. Id. at 2620.

In the case at bar, the Application is based solely on an express bankruptcy statute and an express bankruptcy rule: 11 U.S.C. § 327 and Bankruptcy Rule 2014. State law has no equivalent to this statute and this rule; they are purely creatures of the Bankruptcy Code. Accordingly, because the resolution of this matter is based on solely bankruptcy law, not state law, Stem is inapplicable, and this Court has the constitutional authority to enter a final order on the Application.

[375]*375B. Requirements of a Chapter 7 Trustee in Retaining Counsel for the Estate

A Chapter 7 trustee is the representative of the debtor’s estate, and, as such, is entrusted with certain duties regarding the estate. 11 U.S.C. § 704(a); In re McCombs, 436 B.R. 421, 439 (Bankr.S.D.Tex.2010). Under 11 U.S.C. § 327(a), the trustee may obtain approval to appoint professionals to assist him in carrying out his duties as long as: (1) the professional does not hold an interest adverse to the estate; and (2) the professional is a disinterested person, as defined in 11 U.S.C. § 101(14). The Bankruptcy Code does not define the first requirement of § 327(a)— i.e. lack of adverse interest. Case law, however, defines the term “adverse interest” as: (1) the broad commercial and economic meaning of “adverse interest,” and (2) “possessing or asserting any economic interest that would tend to lessen the value of the estate or create either an actual or potential dispute in which the estate is a rival claimant.” In re Red Lion, Inc., 166 B.R. 296, 298 (Bankr.S.D.Tex.1994). “Adverse interest also includes the attorney’s economic and personal interests.” Id.

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Cite This Page — Counsel Stack

Bluebook (online)
472 B.R. 371, 2012 WL 1144611, 2012 Bankr. LEXIS 1459, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bechuck-txsb-2012.