In Re Lederman Enterprises, Inc., Debtor. Rubner & Kutner, P.C. v. U.S. Trustee Glen R. Anstine, Chapter 7 Trustee Bankers Trust Company

997 F.2d 1321, 11 Colo. Bankr. Ct. Rep. 27, 1993 U.S. App. LEXIS 15913, 24 Bankr. Ct. Dec. (CRR) 674, 1993 WL 229892
CourtCourt of Appeals for the Tenth Circuit
DecidedJune 29, 1993
Docket92-1272
StatusPublished
Cited by116 cases

This text of 997 F.2d 1321 (In Re Lederman Enterprises, Inc., Debtor. Rubner & Kutner, P.C. v. U.S. Trustee Glen R. Anstine, Chapter 7 Trustee Bankers Trust Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Lederman Enterprises, Inc., Debtor. Rubner & Kutner, P.C. v. U.S. Trustee Glen R. Anstine, Chapter 7 Trustee Bankers Trust Company, 997 F.2d 1321, 11 Colo. Bankr. Ct. Rep. 27, 1993 U.S. App. LEXIS 15913, 24 Bankr. Ct. Dec. (CRR) 674, 1993 WL 229892 (10th Cir. 1993).

Opinion

BRORBY, Circuit Judge.

Appellant Rubner & Kutner, P.C. (R & K), appeals the district court’s affirmation of the bankruptcy court’s order granting only a portion of R & K’s requested fees. Because the bankruptcy court did not abuse its discretion in denying compensation for services which were not necessary or beneficial to the estate, we affirm. 1

In August 1987, Lederman Enterprises, Inc. (debtor) filed its initial bankruptcy petition under the reorganization provisions of 11 U.S.C. §§ 1101-46. The debtor was represented by R & K. A plan was confirmed in October 1988, which required the debtor to make payments to Bankers Trust Company. The payments were secured by a deed of trust on the debtor’s primary asset, a hotel and convention center.

On August 12, 1990, the debtor defaulted on its payments, entitling Bankers Trust to immediate possession of the property. The following day, after consulting with R & K, the debtor filed a second Chapter 11 bankruptcy. R & K again represented the debt- or. Bankers Trust immediately filed a motion to dismiss or convert the proceeding to a Chapter 7 liquidation. The United States trustee then filed its own motion to dismiss or convert. Because the issues involved in the motions to dismiss or convert were essentially the same as those to be considered at confirmation, the bankruptcy court established an expedited schedule for plan confirmation. On March 13-14, 1991, a hearing was held on the confirmation, dismissal, and conversion matters. The court denied confirmation of the debtor’s plan, finding that both the plan and the case itself had been filed in bad faith. The case was converted to a Chapter 7 liquidation proceeding.

While the Chapter 11 ease was pending, and then after the case was converted, R & K submitted applications for compensation. Its final application sought $60,745.00 in fees and $3,638.25 in expenses. Following a hearing, the bankruptcy court allowed an award of $17,433.60 in fees and $2,087.45 in expenses. The court first reduced R & K’s fees by twenty percent because its application was insufficiently supported. Incorporating its prior finding that the Chapter 11 proceeding was filed in bad faith and without justification, the court disallowed all time related to the disclosure and plan confirmation process. Because these legal services provided no demonstrable benefit to the bankruptcy estate, the court found them unnecessary. The court also disallowed fees incurred in a private lawsuit against Victor Lederman’s former wife. R & K’s remaining fees were allowed, subject to the across-the-board twenty percent reduction.

On appeal, the district court reversed the bankruptcy court’s twenty-percent reduction, holding that R & K’s billing information was adequate. It affirmed the bankruptcy court’s denial of compensation for services in connection with the Chapter 11 reorganiza *1323 tion, holding that “whether the attorney’s services benefited the estate is a threshold concern.” Appellant’s App., p. 34. The ease was remanded to the bankruptcy court for a recalculation of R & K’s fees. 143 B.R. 772. This appeal followed.

As an initial matter, we must consider whether we have jurisdiction over this appeal. We have jurisdiction only when the district court decision appealed from is “final.” 28 U.S.C. § 158(d). “ ‘[A] decision of the district court on appeal from a bankruptcy judge’s final order is not itself final if the decision remands the case to the bankruptcy judge for significant further proceedings.’ ” Homa, Ltd. v. Stone (In re Commercial Contractors, Inc.), 771 F.2d 1373, 1375 (10th Cir.1985) (quoting Suburban Bank v. Riggsby (In re Riggsby), 745 F.2d 1153, 1156 (7th Cir.1984)). “Significant further proceedings” occur when the bankruptcy court undertakes more than mere “ministerial” computations involving little judicial discretion. State Bank v. Anderson (In re Bucyrus Grain Co.), 905 F.2d 1362, 1366 (10th Cir.1990). Here, the case was remanded for recomputation of R & K’s fees without the twenty percent reduction. Because this is a mere ministerial computation involving little discretion, we may consider the appeal.

R & K argues that the district and bankruptcy courts employed an incorrect legal standard to determine its eligibility for fees. It argues that the benefit to the bankruptcy estate is merely one factor to be considered when using the twelve-factor test adopted in First National Bank v. Niccum (In re Permian Anchor Services, Inc.), 649 F.2d 763, 768 (10th Cir.1981), and that it should not be viewed as a “threshold concern.” We review the bankruptcy court’s conclusions of law de novo. Hall v. Vance, 887 F.2d 1041, 1043 (10th Cir.1989).

In Permian, this court adopted the lodestar analysis set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). This analysis, however, determines only the “reasonableness” of counsel’s fees, Permian, 649 F.2d at 768; Blanchard v. Bergeron, 489 U.S. 87, 91, 109 S.Ct. 939, 943, 103 L.Ed.2d 67 (1989), not its entitlement. The Bankruptcy Code itself sets out the standard to be used in determining counsel’s eligibility for compensation. Section 330 of the Code gives the bankruptcy court discretion to award a reasonable fee for “actual, necessary services.” 11 U.S.C. § 330(a)(1). An element of whether the services were “necessary” is whether they benefited the bankruptcy estate. See, e.g., Canatella v. Towers (In re Alcala), 918 F.2d 99, 103 (9th Cir.1990); In re Reed, 890 F.2d 104, 105-06 (8th Cir.1989); Wootton v. Ravkind (In re Dixon), 143 B.R. 671, 678 (Bankr.N.D.Tex.1992) (“The main inquiry under § 330 is whether the post-petition services were necessary and benefited the estate.”). Because the beneficial nature of legal services must be determined before a reasonableness inquiry may even be conducted, the district and bankruptcy courts did not err in identifying the appropriate legal standard.

R & K next argues that the bankruptcy court erred in finding that the second Chapter 11 filing was made in bad faith and that no benefit to the estate was realized.

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Bluebook (online)
997 F.2d 1321, 11 Colo. Bankr. Ct. Rep. 27, 1993 U.S. App. LEXIS 15913, 24 Bankr. Ct. Dec. (CRR) 674, 1993 WL 229892, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-lederman-enterprises-inc-debtor-rubner-kutner-pc-v-us-ca10-1993.