In Re Bottone

226 B.R. 290, 40 Collier Bankr. Cas. 2d 1455, 1998 Bankr. LEXIS 1409, 1998 WL 774595
CourtUnited States Bankruptcy Court, D. Massachusetts
DecidedNovember 4, 1998
Docket19-10536
StatusPublished
Cited by15 cases

This text of 226 B.R. 290 (In Re Bottone) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Bottone, 226 B.R. 290, 40 Collier Bankr. Cas. 2d 1455, 1998 Bankr. LEXIS 1409, 1998 WL 774595 (Mass. 1998).

Opinion

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

Before the Court is a “Motion for Determination of Claim Status” (the “Motion”) filed by L. Jed Berliner (the “Claimant”), former counsel to Joseph A. Bottone, (the “Debtor”). The questions presented are whether' a claim held by an attorney for services rendered in a Chapter 7 case later converted to a case under Chapter 13 is (1) stayed from collection and/or (2) must be paid through a Chapter 13 plan.

I. FACTS AND PRIOR PROCEEDINGS

The relevant facts are undisputed.

On November 30, 1995, Bottone Remode-lers, Inc. (the “Corporation”) and the Debtor each filed a petition in this Court under Chapter 7 of the Bankruptcy Code. Prior to the commencement of the cases, the Debtor was president of the Corporation, which, in turn, was in the business of conducting inspections for prospective home buyers. The schedules in each case were substantially identical, listing the same assets and liabilities. David L. Sokol (“Sokol”) was identified as the attorney for both the Debtor and the Corporation, and David J. Noonan was appointed as the Chapter 7 trustee in each case. 1

In March of 1996, creditors Carolyn and Mark Mastroianni filed an adversary proceeding against the Debtor seeking that the Court deny the Debtor’s discharge under 11 U.S.C. § 727(a)(2). 2 In May of 1996, creditor *292 Shirley Small filed a similar adversary proceeding against the Debtor. 3 In March of 1997, the Chapter 7 trustee filed an adversary proceeding under 11 U.S.C. § 544(a) and Mass.Gen.Laws Ann. eh. 109A, seeking to avoid a prepetition transfer of a property interest of the Debtor to his spouse. Common to the avoidance action instituted by the Chapter 7 trustee and the section 727 counts in the other adversary proceedings was an allegation that the Debtor had attempted to conceal from creditors, before and after the case, his interest in his marital residence, conveyed to his spouse prior to the commencement of the case. 4

On or about October 30, 1996, the Debtor replaced Sokol as his counsel with the Claimant. During the Claimant’s tenure, he represented the Debtor in each of the three adversary proceedings, none of which had then gone to trial. After approximately five (5) months, the Claimant’s retention was terminated and the Debtor hired Gerald Glasser (“Glasser”) as successor counsel. The Claimant subsequently filed an application requesting approval of the sum of $6,443.03 for fees and expenses (inclusive of interest charged at the rate of 18%) (the “Legal Fee”), less a $2,000 retainer held in an interest bearing account. However, the Claimant later filed a supplemental statement to his fee application. In that supplemental pleading, the Claimant maintained that “he [wa]s not an administrative creditor and ha[d] no claim against the Chapter 7 estate for payment of his fees.” Suppl. Statement Fee App. The Claimant also explained that because he was retained by the Debtor postpetition, the requirements of 11 U.S.C. § 329 5 did not directly apply, but “that this Court [was] the forum to establish the reasonableness of his fees and fee payment under the ‘spirit’ of § 329 and the inherent powers of the Court, leaving collectability to another day and place.” 6 Id. In other words, Claimant’s supplemental pleading sought to clarify that he was not seeking payment of his fees from the estate, but was merely seeking a determination that his fees were reasonable.

(B) property of the estate, after the date of the filing of the petition!)]

On August 6, 1997, the Court held a hearing on the Claimant’s fee application. The Claimant, Glasser and counsel to the Chapter 7 trustee attended. Because the Claimant sought no payment from the estate, the Chapter 7 trustee did not object to the application. However, the Debtor objected to the Claimant’s fee claiming that the Debtor did not have the means to pay the obligation and that there was no documentary support for the payment of interest on the unpaid obligation. At the conclusion of the hearing, the Court found the “fees charged to be reasonable but [left] the parties to their state law rights as to interest.” Ct. Order, August 6, 1997.

During the next few months, the Debtor’s main case remained quiet while the adversary proceedings moved forward. The Chapter 7 Trustee’s avoidance action and the non-dischargeability actions were consolidated for trial. At a pretrial hearing on October 8, *293 1997, counsel for the new Chapter 7 Trustee 7 informed the Court that the only significant asset in this case was the avoidance action against the Debtor’s spouse with regard to the transfer to her of the Debtor’s interest in the marital residence. Counsel to the Chapter 7 Trustee then requested leave to amend the complaint and file a motion for an attachment, lis pendens or preliminary injunction with respect to the property. The request was granted. An amended complaint was ordered to be filed on or before October 24, 1997 and a hearing on any motions and further pretrial was set for December 3, 1997.

Two weeks after the amended complaint was filed, the Debtor moved to convert the case from Chapter 7 to Chapter 13. According to Debtor’s counsel the “conversion to Chapter 13 was done to hold in abeyance [the] three adversary proceedings ... challenging the conveyance of the real estate as fraudulent.” See Debtor’s Chapter 13 Plan. On January 14, 1997, the Court, pursuant to 11 U.S.C. § 706, converted the Debtor’s case to one under Chapter 13.

Shortly after the ease was converted, the Claimant filed the instant Motion. The Debtor filed an opposition. At the hearing on the Motion, the Claimant argued that the Legal Fee was a postpetition claim that could not be paid through the Debtor’s Chapter 13 plan, because it was neither a priority administrative claim nor a general unsecured claim. He further contended that the claim was unaffected by the automatic stay and that he should be free to satisfy his postpetition claim in state court. The Debtor countered by arguing that the Claimant’s postpetition claim should be paid through the plan and that doing so would promote the Debtor’s efforts to pay a dividend to creditors generally.

At the close of the hearing, the Court took the Motion under advisement and the parties were granted an opportunity to file post-hearing briefs. No additional pleadings were filed by either party.

II. DISCUSSION

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

Related

Laronda Freeman
E.D. Michigan, 2019
In re Genatossio
538 B.R. 615 (D. Massachusetts, 2015)
Young v. Young (In re Young)
497 B.R. 922 (W.D. Arkansas, 2013)
Cohn v. Board of Professional Responsibility
151 S.W.3d 473 (Tennessee Supreme Court, 2004)
In Re Redding
242 B.R. 468 (W.D. Missouri, 1999)
In Re Skinner
240 B.R. 225 (W.D. Virginia, 1999)
In Re Brierwood Manor, Inc.
239 B.R. 709 (D. New Jersey, 1999)
In Re Colburn
231 B.R. 778 (D. Oregon, 1999)
In Re Toms
229 B.R. 646 (E.D. Pennsylvania, 1999)

Cite This Page — Counsel Stack

Bluebook (online)
226 B.R. 290, 40 Collier Bankr. Cas. 2d 1455, 1998 Bankr. LEXIS 1409, 1998 WL 774595, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bottone-mab-1998.