In re Goines

465 B.R. 704, 2012 WL 470449
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedFebruary 9, 2012
DocketNo. 11-76654-JRS
StatusPublished
Cited by14 cases

This text of 465 B.R. 704 (In re Goines) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Goines, 465 B.R. 704, 2012 WL 470449 (Ga. 2012).

Opinion

ORDER

JAMES R. SACCA, Bankruptcy Judge.

The issue before the Court in this Chapter 13 case is whether it is the responsibility of the Chapter 13 trustee, the debtor or special counsel to file the application to retain special counsel under 11 U.S.C. § 327(e) to prosecute a state law cause of action in which the Chapter 13 debtor is in possession of the claim.1

The confirmation hearing on Debtors’ Chapter 13 plan was held on December 1, 2011. At the § 341 Meeting of Creditors, the Debtors testified that they had retained an attorney, Jeffrey Flynn, Esq. (“Flynn”), to represent them in connection with a pre-petition workers’ compensation claim, which claim had been denied and which denial was on appeal. The Chapter 13 Trustee objected to Debtors’ Plan because (a) the Debtors had neither filed an application nor obtained an order approving the retention of Flynn as special counsel and (b) the failure to obtain an order approving retention of special counsel should preclude confirmation. At the confirmation hearing, the Court concluded that (1) there was no per se rule requiring approval by the Court of the retention of special counsel as a condition of confirmation and (2) under the facts of this case, including that the claim had already been denied, the entry of an order approving the retention of special counsel was not required for confirmation of the plan, although a different result may be appropriate depending on the facts of the case and the terms of the plan.2 The Debtors’ bankruptcy attorney also filed what was styled as a “Notice of Action Potentially Required Pursuant to 11 U.S.C. Sec. 327(e)” (the “Notice”), advising Flynn that, inter alia, he either needed to personally prepare and file the application to be retained or contact the Chapter 13 Trustee to be retained. The Court took the issue under advisement because the parties requested the opportunity to brief the issue.

Section 327(e) provides the following:

[706]*706The trustee, with the court’s approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to the debtor or to the estate with respect to the matter on which such attorney is to be employed.

The Debtors argue that under the plain meaning of § 327(e), it is the responsibility of the Chapter 13 Trustee to file the application to retain special counsel regardless of who is controlling the litigation because a Chapter 13 debtor is not a trustee for the purposes of § 327. This Court disagrees.

Based on a review of the applicable statutes and case law, the Court concludes that the word “trustee” in § 327(e) includes a Chapter 13 debtor-in-possession. In other words, the Chapter 13 debtor, if he is in possession of a non-bankruptcy cause of action, has the authority and duty to file an application to employ special counsel, as opposed to the Chapter 13 trustee or special counsel. Envtl. Litig. Grp., P.C. v. Crawford (In re Price), No. 07-00017, 2007 WL 1125639, at *4 n. 11 (April 16, 2007 Bankr.N.D.Ala.) (discussing In re Griner, 240 B.R. 432, 436 (Bankr.S.D.Ala.1999)) (“[E]ven though section 327(e) does not use the word ‘debtor,’ should it not be assumed that the word debtor is interchangeable with trustee given this line of cases?”); In re Jenkins, 406 B.R. 817, 819 (Bankr.N.D.Ind.2009).

Property of the estate includes claims that may be prosecuted for the benefit of the estate. 11 U.S.C. § 1306; 11 U.S.C. § 541; Cable v. Ivy Tech State Coll, 200 F.3d 467, 473 (7th Cir.1999). Section 1306(b) provides that “the debtor shall remain in possession of all property of the estate except as provided in a confirmed plan or order confirming a plan.” 11 U.S.C. § 1306(b). The order confirming the plan in this case, like all uniform plans in the Northern District of Georgia, provides that property remains vested in the estate upon confirmation, but that does not mean that the debtor does not remain in possession of that property.

Many courts have recognized that “the Chapter 13 debtor has been considered analogous to [a] Chapter 11 [debt- or-in-possession], ... [and Chapter 11] grants the debtor full authority as representative of the estate typical of a trustee.” Cable, 200 F.3d at 472 (citation omitted). Further, “[u]nder the reorganization chapters [including Chapter 13], the debtor-in-possession steps into the role of trustee and exercises concurrent authority to sue and be sued on behalf of the estate.” Id. at 473. Consequently, Chapter 13 debtors have standing to pursue claims and conduct litigation in their own name on behalf of the bankruptcy estate. Crosby v. Monroe Cnty., 394 F.3d 1328, 1331 n. 2 (11th Cir.2004); Smith v. Rockett, 522 F.3d 1080, 1081 (10th Cir.2008); Cable, 200 F.3d at 472-73; Olick v. Parker & Parsley Petroleum Co., 145 F.3d 513, 515 (2d Cir.1998); Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1209 n. 2 (3d Cir.1992); In re Bowker, 245 B.R. 192 (2000).

Federal Rule of Bankruptcy Procedure 6009 provides:

With or without court approval, the trustee or debtor in possession may prosecute or may enter an appearance and defend any pending action or proceeding by or against the debtor, or commence and prosecute any action or proceeding in behalf of the estate before any tribunal.

Fed. R. Bankr.P. 6009. Rule 6009 applies to Chapters 7, 11 and 13. Cable, 200 F.3d at 472. “In this context, ‘trustee’ or ‘debt- [707]*707or in possession’ includes a Chapter 13 debtor.” In re Stewart, 373 B.R. 801, 805 (Bankr.S.D.Ga.2007) (citing Crosby, 394 F.3d at 1331 n. 2; Cable, 200 F.3d at 472).

Not only do Chapter 13 debtors have standing to pursue such claims, they are the ones who actually control the litigation. “In Chapter 13 cases where the debtor is the party plaintiff, courts recognize that the Chapter 13 debtor may sue and be sued, and that the debtor controls the litigation as well as the terms of the settlement.” Crosby, 394 F.3d at 1331 n. 2 (quoting In re Mosley, 260 B.R. 590, 595 (Bankr.S.D.Ga.2000)) (internal quotation marks omitted).

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Cite This Page — Counsel Stack

Bluebook (online)
465 B.R. 704, 2012 WL 470449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-goines-ganb-2012.