In Re Corbett

145 B.R. 332, 6 Fla. L. Weekly Fed. B 235, 1992 Bankr. LEXIS 1498, 1992 WL 238102
CourtUnited States Bankruptcy Court, M.D. Florida
DecidedJuly 31, 1992
DocketBankruptcy 91-06719-BKC-6C7, 92-01553-BKC-6C7, 92-01922-BKC-6C7 through 92-01926-BKC-6C7, 92-01949-BKC-6C7 through 92-01958-BKC-6C7, 92-02183-BKC-6C7 through 92-02187-BKC-6C7
StatusPublished
Cited by2 cases

This text of 145 B.R. 332 (In Re Corbett) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Corbett, 145 B.R. 332, 6 Fla. L. Weekly Fed. B 235, 1992 Bankr. LEXIS 1498, 1992 WL 238102 (Fla. 1992).

Opinion

MEMORANDUM OPINION REGARDING EXAMINATION OF ATTORNEYS FEES

C. TIMOTHY CORCORAN, III, Bankruptcy Judge.

The 22 Chapter 7 cases captioned above involve common questions as to the reasonableness of attorneys fees charged the debtors by an attorney, T. Michael Price. The court conducted a joint evidentiary hearing in these cases on May 13, 1992. Based upon the testimony and other evidence adduced at the hearing, the court concludes that the fees charged these debtors are in fact excessive.

I.

When each of these cases was filed, the petitions, statements, and schedules in the court files contained information that Mr. Price was serving in some capacity as attorney on behalf of the debtors. This information raised questions as to the propriety of Mr. Price’s involvement and the reasonableness of the fees he charged because, well before the filing of these cases, Mr. Price was removed from the roster of attorneys permitted to practice in the United States District Court for the Middle District of Florida. Admission to that bar, of course, is a prerequisite to an attorney’s ability to practice in this court. Local Rule 1.07(a) (effective June 1, 1992); former Local Rule 109(a).

The court, therefore, entered an order in each of the cases declaring the initiation of a contested matter within the meaning of *334 F.R.B.P. 9014 and scheduling an evidentia-ry hearing to review the attorneys fees. Each order further directed the United States trustee and the Chapter 7 trustee appointed in each case, jointly, as petitioners, to investigate the circumstances described in each of the orders and to present testimony and evidence at the hearing. Each order also directed Michael Price and Michael Price, P.A., as respondents, to file and serve answers. In the Corbett case, the only case in which another attorney appeared to be involved on behalf of the debtors, the court also directed that attorney, Francisco Colon, to file and serve an answer.

Despite the court’s order, Michael Price failed to answer or respond in any of the cases, either on behalf of himself or his professional association. Despite the court’s order that Mr. Price appear at the evidentiary hearing on May 13, he did not do so, either personally or through counsel. Mr. Colon answered and appeared at the hearing. Each of the Chapter 7 trustees in the 22 cases, the United States trustee, and the majority of the debtors appeared as directed.

There are no fee applications pending in any of the cases nor are there pending any objections filed by any party in interest to the fees paid to Mr. Price or his professional association before the cases were filed. Nevertheless, it is fundamental that the court has an independent duty to determine whether the compensation paid to an attorney in connection with a bankruptcy case exceeds the reasonable value of the services rendered. In re Wood & Henderson, 210 U.S. 246, 258, 28 S.Ct. 621, 626, 52 L.Ed. 1046 (1908); In re Rheuban, 121 B.R. 368, 379 (Bankr.C.D.Cal.1990). That authority derives from 11 U.S.C. § 329 which provides:

§ 329. Debtor’s transactions with attorneys.
(a) Any attorney representing a debtor in a case under this title, or in connection with such a case, whether or not such attorney applies for compensation under this title, shall file with the court a statement of the compensation paid or agreed to be paid, if such payment or agreement was made after one year before the date of the filing of the petition, for services rendered or to be rendered in contemplation of or in connection with the case by such attorney, and the source of such compensation.
(b) If such compensation exceeds the reasonable value of any such services, the court may cancel any such agreement, or order the return of any such payment, to the extent excessive, to—
(1) the estate, if the property transferred—
(A) would have been property of the estate; or
(B) was to be paid by or on behalf of the debtor under a plan under Chapter 11, 12, or 13 of this title; or
(2) the entity that made such payment.

The Federal Rules of Bankruptcy Procedure further provide that the court may examine the reasonableness of fees on the motion of any party in interest or on its own motion. Specifically, Rule 2017 provides:

Rule 2017. Examination of debtor’s transactions with debtor’s attorney.
(a) Payment or transfer to attorney before order for relief. On motion by any party in interest or on the court’s own initiative, the court after notice and a hearing may determine whether any payment of money or any transfer of property by the debtor, made directly or indirectly and in contemplation of the filing of a petition under the Code by or against the debtor or before entry of the order for relief in an involuntary case, to an attorney for services rendered or to be rendered is excessive.
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The purpose of these provisions is to protect the debtor and the estate from overreaching by the debtor’s attorney. See In re Rheuban, supra at 377.

II.

Based on the evidence adduced at the hearing and the official records maintained *335 by the clerk of this court and the clerk of the district court, the facts surrounding Mr. Price’s standing at the federal bar are these:

By order entered on July 3, 1991 (Mise. No. 91-MISC-J-203), the Chief Judge of the United States District Court for the Middle District of Florida, the Honorable Susan H. Black, directed the clerk of that court to remove T. Michael Price from the roster of attorneys permitted to practice in that court. Although Judge Black entered this order on July 3, 1991, it appears that the clerk did not serve the order on Mr. Price until October 8, 1991. By early October, therefore, Mr. Price knew he was no longer permitted to represent debtors or otherwise practice in this court.

On February 19, 1992, Mr. Price filed with the clerk of the district court an application for admission to the bar. The application was in the form used by new applicants to the district court’s bar. In the application, Mr. Price did not reveal that he had been previously been removed from the federal bar in this district. Instead, as a new applicant would do, he supported the application with a certificate of good standing, signed on February 11, 1992, by the clerk of the United States District Court for the Southern District of Florida. Because the earlier removal by Chief Judge Black was not known by the deputy clerks who processed the application, Mr.

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Cite This Page — Counsel Stack

Bluebook (online)
145 B.R. 332, 6 Fla. L. Weekly Fed. B 235, 1992 Bankr. LEXIS 1498, 1992 WL 238102, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-corbett-flmb-1992.