In re Boston & Maine Corp.

46 B.R. 966, 1984 U.S. Dist. LEXIS 23022
Procedural entryThis page is a short order in In re Boston & Maine Corp.. Read the opinion of the Court — 46 B.R. 930
District Court, D. Massachusetts·Decided October 4, 1984·No. No. 70-250-M·Published

Opinion

MEMORANDUM

APPLICATION OF EDWARD I. MAS-TERMAN, COUNSEL TO THE TRUSTEES OF THE BOSTON AND MAINE CORPORATION, DEBTOR, FOR FINAL COMPENSATION FOR SERVICES RENDERED AND DISBURSEMENTS INCURRED

FRANK J. MURRAY, Senior District Judge.

The application of Edward I. Masterman, Esquire (the “Applicant”), for allowance of final compensation in the amount of $385,-000.00 out of the Debtor’s estate for services rendered, and expenses incurred in the sum of $1294.85, for the period October 1, 1965 through October 30, 1981, came on to be heard after due notice to creditors and [968]*968other parties in interest. The Interstate Commerce Commission, pursuant to 11 U.S.C. § 205(c)(2), has fixed the maximum limits within which allowance of compensation to the Applicant may be made, and has filed its decision with this court. Creditors and other parties in interest were afforded opportunity to be heard by the court at the hearing on the application. Absence of formal objection by creditors does not relieve the court of the responsibility of close and systematic scrutiny of the application to ensure that the allowance approved is within permissible limits. See In re J.M. Wells, Inc., 575 F.2d 329 (1st Cir.1978).

Applicant seeks allowance of compensation and reimbursement of expenses out of Debtor’s estate for services rendered by him, his partners and associates, before and after March 12, 1970, the date the petition for reorganization of Boston and Maine Corporation (the “B & M”)1 was filed, pursuant to Section 77 of the Bankruptcy Act (11 U.S.C. § 205).

Beginning October 1, 1965, the Applicant represented B & M with reference to possible takings of B & M upland, and revocation of certain B & M tideland licenses, by the Commonwealth of Massachusetts (the “Commonwealth”) for the purpose of laying out an important segment of a major highway: Route I 695. On August 9, 1967 the Commonwealth made takings of 917,-796 square feet of B & M upland, and on the same day the Massachusetts legislature enacted Chapter 534 of the Acts of 19672 providing for revocation of certain tideland licenses held by B & M. The Commonwealth offered a pro tanto payment in the amount of $1,025,000 for damages resulting from takings of the upland, and contended no damages were due B & M for revocation of the tideland licenses. On November 8, 1968 the Commonwealth, at the behest of B & M, reconveyed 237,942 square feet of upland taken on August 9, 1967, and thereupon reduced its pro tanto offer to $918,500.00. The Applicant commenced three actions for damages in the Massachusetts Superior Court in behalf of B & M against the Commonwealth in July 1969: one action for the taking of B & M upland in Somerville, one action for the taking of B & M upland in Charlestown, and the third action for revocation of the tideland licenses. On March 12, 1970 when the petition for reorganization of B & M was filed, the three actions had not been resolved and were pending in the Superior Court. The Debtor’s trustees hired the Applicant to represent them in the actions as of March 27, 1972 pursuant to pre-exist-ing court Order No. 105.3 Trial of the actions commenced some eight years later on May 19, 1980 before a single judge without jury. On October 7, 1980 the judge entered his findings in the case and awarded to Debtor “the amount of $2,838,-533.00 less any pro tanto paid, plus interest from the date of the taking plus costs”. The Commonwealth then filed a claim for trial de novo before a jury, under Mass. Gen. Laws ch. 79, § 22 (as amended), and the judgment based on the findings of the single judge was vacated. Settlement of the cases in the amount of $2.0 million was agreed upon in August 1981. The Commonwealth issued a certificate of judgment to Debtor’s trustees for $2.0 million on August 21, 1981, and delivered its check for $2,020,000.00 to the Debtor’s trustees on October 28, 1981 in satisfaction of the judgment and post-judgment interest of $20,000.00.

The fee application, covering the period from October 1, 1965 through October 30, 1981, claims compensation for (a) pre-reor-ganization services rendered to B & M, and (b) services rendered as trustees’ special counsel during the reorganization proceedings on actions against the Commonwealth which were unresolved and ongoing when the petition for reorganization was filed on March 12, 1970. No issue, other than the determination of the amount of compensation, arises as to allowance of compensation to Applicant for authorized services rendered as special counsel pursuant to Order [969]*969No. 105. Additional questions arise, however, as to compensation allowable for pre-reorganization legal services.

No document or other evidence was submitted to the court that establishes terms of an express employment contract between Applicant and B & M. On the other hand, an implied agreement of retainer may be found from Applicant’s representation of B & M when the Commonwealth made the takings of B & M property, and continuing thereafter. When Applicant commenced the state court actions he acquired an attorney’s “lien for his reasonable fees and expenses upon his client’s cause of action”. Mass.Gen.Laws ch. 221 § 50. The security of the state law lien did not terminate when the petition for reorganization was filed, and was not terminated by action of the trustees. The lien did terminate when Applicant voluntarily accepted employment to prosecute the actions against the Commonwealth as trustees’ special counsel pursuant to Order No. 105. From that time forward, services rendered by Applicant attributed to the estate, and the right to compensation therefor, were governed by 11 U.S.C. § 205 and not by state law.

On this application the court may determine the compensation due Applicant secured by the state law lien, and compensation due him from March 27, 1972 as trustees’ special counsel. Applicant’s requests for allowance of compensation for pre-reor-ganization services which rest on unsecured claims, or the invocation of general equitable powers of the court, are not cognizable .on this fee application on the presentation made to the court.

The measure of compensation allowable here is reasonable compensation, whether based on the security of the attorney's lien or Applicant’s role as special counsel for the trustees under 11 U.S.C. § 205(c)(2). Despite the Applicant’s contention, the provisions of 11 U.S.C. § 330(a) of the Bankruptcy Code (1978), described in Applicant’s memorandum as “the statutory imperative to determine fees related to the cost of similar services in a non-bankruptcy context”, are not applicable to these reorganization proceedings. See 11 U.S.C. prec. § 101 (1978) (Savings Provisions).

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In re Boston & Maine Corp., 46 B.R. 966, 1984 U.S. Dist. LEXIS 23022 (D. Mass. 1984).

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