In re Smith

536 B.R. 773, 2015 Bankr. LEXIS 3101, 2015 WL 5340146
CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedSeptember 14, 2015
DocketCase No. 14-47317
StatusPublished

This text of 536 B.R. 773 (In re Smith) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Smith, 536 B.R. 773, 2015 Bankr. LEXIS 3101, 2015 WL 5340146 (Mich. 2015).

Opinion

Opinion Awarding Final Fees And Expenses To Attorney For Chapter 7 Trustee

Phillip J. Shefferly, United States Bankruptcy Judge

This opinion deals with the final application for fees and expenses filed by the attorney for the Chapter 7 Trustee in this case. The largest creditor in the case has objected. The Court heard the fee application and the objection on August 26, 2015. At the conclusion of the hearing, the Court took the matter under advisement. For the reasons explained in this opinion, the Court will award final fees in the amount of $15,199.00 and reimbursement of expenses in the amount of $334.46.

Background

William Smith (“William”) and Cheryl Smith (“Cheryl”) filed a joint petition under Chapter 7 of the Bankruptcy Code on April 28, 2014. Their schedules show that William was the sole owner of their home located at 9080 Rattle Run Road, Columbus Township, Michigan (“Columbus Property”). The Debtors’ schedules also show that William owned a 1/3 interest in property located at 5635 Grandview, Newport, Michigan (“Newport Property”). According to the Debtors’ schedules, the Columbus Property had a value of $124,963.00, and his 1/3 interest in the Newport Property had a value of $19,666.66. The Debtors’ schedules also show that there was a first mortgage on the Columbus Property in the amount of $36,847.49, and the Newport Property was completely unencumbered. Even after William’s exemption in the Columbus Property in the amount of $35,300.00, the Debtors’ schedules show that there was equity for the bankruptcy estate in both in the Columbus Property and the Newport Property. The Debtors’ schedules list total unsecured debts in the amount of $221,166.60.

Stuart A. Gold is the Chapter 7 trustee (“Trustee”). On May 30, 2014, the Trustee filed a verified statement of disinterestedness, pursuant to Local Bankruptcy Rule 2014-l(c) (E.D.M.), stating that the Trustee’s law firm, Gold, Lange & Majoros, P.C. (“Law Firm”), would be acting as the attorney for the Trustee in this case. On July 8, 2014, the Trustee obtained an order authorizing him to employ Jeffrey Kakos, a real estate broker, to assist the Trustee in marketing and selling the Columbus Property.

In one respect, the Debtors’ bankruptcy case went very smoothly. The Debtors received their discharge on August 5, 2014. However, in other respects, the bankruptcy case was more complicated. First, on [775]*775August 1, 2014, Edith Radulovich (“Radu-lovich”) the largest creditor in the case, filed an adversary proceeding against William under § 523(a)(4) of the Bankruptcy Code. Radulovich alleged that William was previously married to Radulovich’s sister, Shirley Wilmoth (“Shirley”), and that William and Shirley had fraudulently taken funds from Radulovich’s mother, Pearl Wilmoth, and converted them for their own benefit. The complaint further alleged that Radulovich obtained a judgment in state court against William and Shirley on September 26, 2001 in the amount of $150,000.00 (“State Court Judgment”). Although Shirley is now deceased, Radulo-vich’s complaint sought a determination that the State Court Judgment is a nondis-chargeable debt of William. On March 10, '2015, Radulovich entered into a stipulation with William providing for a consent judgment in her favor that could be satisfied by William paying $16,000.00. That disposed of the adversary proceeding brought by Radulovich.

Radulovich was also involved in another adversary proceeding, this time as a defendant. On September 15, 2014, the Trustee filed a complaint against Radulovich, alleging that William and Radulovich are co-owners of the Newport Property, and seeking authority under § 363(h) of the Bankruptcy Code to sell both the bankruptcy estate’s interest and Radulovich’s interest in the Newport Property. Through her attorney, Radulovich obtained several extensions of the date to answer the complaint. On January 13, 2015, the Trustee and Radulovich stipulated to enter an order that dismissed this adversary proceeding. Although the complaint in this adversary proceeding only pertained to the Newport Property, the stipulated order of dismissal also addressed the Columbus Property. Specifically, it provided that Radulovich would waive any and all secured claims that she had against any property of the bankruptcy estate, including any secured claims against the Columbus Property under a December 8, 2010 Notice of Judgment Lien that she had filed on the Columbus Property pursuant to the State Court Judgment. In addition, the stipulated order also stated that the proof of claim filed by Radulovich in the bankruptcy case would be allowed and reclassified as a general unsecured claim in the amount of $262,561.35.

While the two adversary proceedings involving Radulovich were being resolved, the Trustee filed a motion in the bankruptcy case on February 4, 2015 to sell the Columbus Property free and clear of all liens and encumbrances. Radulovich did not object to the motion, nor did any other party in interest object. Based on a certificate of no response, the Trustee requested that the Court grant the motion and authorize the Trustee to sell the Columbus Property. On February 24, 2015, the Court entered an order granting the Trustee’s motion. The Trustee then moved forward to sell the Columbus Property. According to the Trustee’s report of sale filed on March 26, 2015, the Trustee sold the Columbus Property on March 20, 2015 for $177,722.37. After payment of closing costs, broker commissions, seller concessions and a payoff of the first mortgage, the bankruptcy estate netted $119,043.89 from the sale.

Shortly after the sale of the Columbus Property was closed, on April 3, 2015, the Law Firm filed a first application for interim compensation (“Interim Application”) (ECF No. 50). In the Interim Application, the Law Firm sought fees for the period from May 29, 2014 through March 31, 2015 in the amount of $16,848.00 and reimbursement of expenses in the amount of $334.46. Neither Radulovich nor any other party in the case filed a timely objection. On April [776]*77628, 2015, the Law Firm filed a certificate of no response. Based on the certificate, and after conducting its own review of the Interim Application, the Court entered an order granting it on April 28, 2015 (ECF No. 53).

Subsequently, the Court learned that Radulovich had filed a late objection to the Interim Application on April 29, 2015 (ECF No. 54). Although Radulovich was represented by an attorney throughout the bankruptcy case and both adversary proceedings, Radulovich filed the objection pro se. Since it appeared to the Court that it was possible that Radulovich’s objection may have crossed in the mail with the Law Firm’s certificate of no response, and since Radulovich was the largest creditor in the bankruptcy case, the Court determined to schedule a hearing on her objection on May 29, 2015, even though her objection was not filed until after the Court had granted the Interim Application.

On May 29, 2015, the Court held the hearing. The Trustee, the Law Firm and Radulovich all appeared at the hearing. Radulovich appeared pro se. During a recess in the hearing, the parties discussed postponing the hearing until after the Trustee had filed a final report and a final fee application. The parties explained that this would permit them the opportunity to discuss all of the services rendered by the Law Firm and address any questions that Radulovich may have about them. Based on the agreement of the parties, the Court adjourned the hearing.

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Cite This Page — Counsel Stack

Bluebook (online)
536 B.R. 773, 2015 Bankr. LEXIS 3101, 2015 WL 5340146, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-smith-mieb-2015.