In re Southern Tier Energy Products, Inc.

109 B.R. 96, 22 Collier Bankr. Cas. 2d 1204, 1989 Bankr. LEXIS 2266, 19 Bankr. Ct. Dec. (CRR) 1949, 1989 WL 159458
CourtDistrict Court, M.D. Pennsylvania
DecidedDecember 28, 1989
DocketBankruptcy No. 5-83-00389
StatusPublished
Cited by2 cases

This text of 109 B.R. 96 (In re Southern Tier Energy Products, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Southern Tier Energy Products, Inc., 109 B.R. 96, 22 Collier Bankr. Cas. 2d 1204, 1989 Bankr. LEXIS 2266, 19 Bankr. Ct. Dec. (CRR) 1949, 1989 WL 159458 (M.D. Pa. 1989).

Opinion

THOMAS C. GIBBONS, Bankruptcy Judge.

In this Chapter 7 liquidation, we have for consideration a series of related motions. They are addressed in this Memorandum.

On June 23, 1989, John H. Appleton, Esq., (hereinafter “Panel Trustee”) filed a Motion for Approval of Trustee’s Expenses under § 506(c) of the Bankruptcy Code. Said Motion was served on the United States Trustee (hereinafter “U.S. Trustee”) on August 23, 1989. On September 6, 1989, a document styled Objection of the [97]*97United States Trustee to the Motion for Approval of Trustee’s Expenses was filed. Inter alia, this objection states that the application of the Panel Trustee did not provide the detail required by the Bankruptcy Code, the court rules, and did not differentiate between the work of the Panel Trustee and the Trustee’s attorneys. Lastly, it did not provide an adequate description for the services for which the compensation was requested. (It is noted that both documents referred to 11 U.S.C. § 506(c) as the basis for the application. This is an obvious error as that section has nothing to do with compensation).

On September 28, 1989, the Panel Trustee responded to the U.S. Trustee’s Objection and filed a Motion for Sanctions against him. Essentially, this response states that all the requirements of the Code and rules have been met and requests a dismissal of the U.S. Trustee’s Objections.

On October 2,1989, Panel Trustee Appleton served a Notice of Deposition and Production of Documents on David S. Brady and Erma Weigel, employees of the office of the United States Trustee.

On October 6, 1989, a Motion for a Protective Order (stay of discovery) pursuant to F.R.C.P. 26(c) was filed through the Office of the United States Attorney. A Brief in support of said Motion for Protective Order was served on Trustee Appleton and others on October 11, 1989. Panel Trustee filed a response to the Motion for a Protective Order on October 16, 1989 stating that said Motion failed to set forth any ground or legal basis for the relief requested and asking that the Deposition and Request for Production of Documents be allowed to go forward.

On October 12, 1989, a Protective Order was in fact entered directing that all discovery related to the U.S. Trustee’s Objections to the Motion for Approval of Trustee’s (Appleton) Expenses was temporarily stayed until a hearing was held.

On October 13, 1989, the Panel Trustee filed a Motion to Disqualify the United States Department of Justice as attorneys for the U.S. Trustee.

On October 17, 1989, an Order was entered directing the Trustee to amend his fee application to address the objections of the U.S. Trustee within thirty (30) days.

On November 20, 1989, an Amended First and Final Accounting of Nogi, Appleton, Weinberger & Wren, P.C. was filed, together with a “Consolidated Memorandum of Law in Support and In Opposition.”

On November 24, 1989, Objections were filed by the U.S. Trustee to the Amended Fee application of Trustee’s attorneys. Inter alia, said objections state the following grounds:

“1. There is no request for application by said attorneys for nunc pro tunc application of their appointment prior to date of March 3, 1989; all but two and two tenths hours (2.2) in their attached time-accounting predate the date of appointment and are not allowable under the case law of the Third Circuit.
2. The Amended Application fails to set forth any statement of legal issues or complexities requiring the Attorney’s expertise. There is every indication that most services for which the Attorney seeks compensation were ministerial duties which the law requires the Trustee himself to perform.
3. The Attorney for the Trustee seeks compensation for review of numerous routine letters and other simple documents and for conferences and phone calls, offering no explanation why there is any particular legal significance to them which requires the attorney’s expertise.
4. It appears from the Amended Application that the Attorney for the Trustee has simply performed all of the tasks which the Trustee himself was obligated to perform in his capacity as Trustee and seeks compensation for same over and above the Trustee’s commission which would be payable under 11 U.S.C. 326.
5. When a Trustee’s law firm is appointed as attorney for the Trustee, the [98]*98court is obliged to ‘. allow compensation only to the extent that the trustee performed services as attorney or accountant for the estate and not for performance of any of the trustee’s duties pursuant to 11 U.S.C. 328(b).”

A Memorandum in Support of the U.S. Trustee’s Objection was filed the same date.

MOTION TO DISQUALIFY U.S. ATTORNEY

We consider first the Motion of the Panel Trustee to Disqualify the U.S. Attorney from acting in behalf of the U.S. Trustee. It states the following grounds:

“Due to a conflict of interest as the Department has, without explanation, chosen to adopt the position of the United States Trustee over that of the panel Trustee in a matter pending before this Honorable Court under circumstances in which either party could have been provided representation.”

This Motion is in the nature of response to a Motion for a Protective Order filed by the United States Department of Justice in behalf of certain named employees of the Office of the U.S. Trustee for this District. In a Memorandum in Support of Panel Trustee’s position, it is stated that the Department of Justice has “opted to represent the Office of the U.S. Trustee in a proceeding against the Panel Trustee.” Further, that the U.S. Trustee and the Panel Trustee are government employees who are under the auspices of the United States Department of Justice and under the circumstances, the Department of Justice should not be permitted to represent the Office of the U.S. Trustee to the exclusion of the Panel Trustee. The latter offers no authority for these positions while the Department of Justice response states quite accurately that the Panel Trustee is not in fact an employee of the Department of Justice in that his services as such do not entitle him to that status. Moreover, the Department of Justice response indicates that a Panel Trustee cannot in fact be regarded as a Department of Justice employee because of the Code of Federal Regulations, 28 C.F.R., Part 0.45 in that the Panel Trustee’s principal engagement is the private practice of law.

Moreover, the Department of Justice maintains that even if the Panel Trustee in this instance had thought that he was entitled to representation by the Department of Justice he has failed utterly to follow the regulations in seeking to obtain such representation. They are set forth in 28 C.F.R. Sections 50.15 and 50.16.

Quite apart from the position of the Department of Justice in this connection a brief review of the history of the creation of Panel Trustees is helpful.

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Bluebook (online)
109 B.R. 96, 22 Collier Bankr. Cas. 2d 1204, 1989 Bankr. LEXIS 2266, 19 Bankr. Ct. Dec. (CRR) 1949, 1989 WL 159458, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-southern-tier-energy-products-inc-pamd-1989.