In Re the George Worthington Co., Debtor

913 F.2d 316, 1990 WL 129274
CourtCourt of Appeals for the Sixth Circuit
DecidedNovember 30, 1990
Docket89-3279, 89-3286
StatusPublished
Cited by9 cases

This text of 913 F.2d 316 (In Re the George Worthington Co., Debtor) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re the George Worthington Co., Debtor, 913 F.2d 316, 1990 WL 129274 (6th Cir. 1990).

Opinions

CONTIE, Senior Circuit Judge.

The appellant, the official unsecured creditors’ committee of the George Wor-thington Company, appeals the district court’s denial of its application for reimbursement of administrative expenses from the bankruptcy estate.

I.

The debtor, The George Worthington Company, filed a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Bankruptcy Code (the “Code”) on September 24, 1986. Pursuant to section 1102(a)(1) of the Code,1 the United States Bankruptcy Court appointed an official committee of -creditors (the “Committee”) holding unsecured claims against The George Worthington Company. The Committee consisted of twelve members from nine states and represented unsecured claims of over $13 million.

On May 18, 1987, the Committee submitted an interim application for reimbursement of administrative expenses to the bankruptcy court, requesting reimbursement of expenses totaling $12,050.94. There was no objection to the application by the debtor. On August 14, 1987, 76 B.R. 605, the bankruptcy court entered an interlocutory order denying the Committee’s interim application. The bankruptcy court held that the Bankruptcy Code does not authorize reimbursement of administrative expenses to a creditors’ committee appointed pursuant to section 1102 of the Code (a “statutory committee”). On August 24, 1987, the Committee sought immediate review of the interlocutory order. On November 18, 1987, Chief Judge Battisti granted the Committee’s motion for leave to appeal. The Committee filed a notice of appeal docketed as case No. C87-3394, requesting that the district court reverse the bankruptcy court’s interlocutory order.

In July 1988, the Committee submitted a final application for reimbursement of expenses to the bankruptcy court, seeking reimbursement in the amount of $4,676.16. The final application also requested that the bankruptcy court reconsider its interlocutory order and award reimbursement of both interim and final committee expenses totaling $16,727.10. The bankruptcy court denied the final application for administrative expenses and refused to reconsider its interlocutory order. On Sep[318]*318tember 29, 1988, the Committee filed a notice of appeal of the bankruptcy court’s order. On February 27, 1989, District Judge Alice M. Batchelder entered an order in Case No. C87-3394, which denied the Committee’s motion for leave to appeal the interlocutory order previously granted by Judge Battisti. On March 27, 1989, the Committee filed a notice of appeal from Judge Batchelder’s February 27, 1989 order. The appeal from the district court’s February 27, 1989 order has been designated by this court as case No. 89-3279.

On February 28, 1989, the district court entered an order affirming the bankruptcy court’s denial of the Committee’s final application for administrative expenses and affirming the bankruptcy court’s denial of reconsideration of its interlocutory order. The Committee filed a timely notice of appeal designated in this court as case No. 89-3286.

II.

Appellant first contends that the district court violated the doctrine of law of the case in its February 27, 1989 order by denying the Committee’s motion for leave to appeal the bankruptcy court’s interlocutory order, which had previously been granted by Judge Battisti. Appellant argues that the well established doctrine of law of the case provides that once an issue has been decided it cannot be relitigated. Because Judge Battisti granted the motion to appeal the interlocutory order, appellant argues that it was error for Judge Batchelder to deny it.

We find no merit in this argument. This court has stated:

A wide degree of freedom is often appropriate when the same question is presented to different judges of a single district court. To be sure, unfettered reexamination would unduly encourage efforts to shop rulings from one judge to another, and might seem an undesirable denial of comity between colleagues. Substantial freedom is desirable nonetheless, particularly since continued proceedings may often provide a much improved foundation for deciding the same issue.

Cale v. Johnson, 861 F.2d 943, 947 (6th Cir.1988) (quoting 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4478 (1981)). In the present case, the district court in its order of February 27, 1989 did not abuse its discretion by denying the Committee’s leave to appeal the bankruptcy court’s interlocutory order, even though leave to appeal had previously been granted. The court had before it an interlocutory order denying an interim application for administrative expenses and a final order denying a final application for administrative expenses. In order to avoid piecemeal litigation, the district court denied appeal of the interlocutory order and ruled on the merits of the final order. The purpose, of the doctrine of law of the case is to promote judicial comity, the judicial system’s interest in finality, and the efficient administration of cases. These purposes were furthered, not violated, by the district court’s February 27, 1989 order. For this reason, the district court’s order of February 27, 1989 denying the motion for leave to appeal the bankruptcy court’s interlocutory order is hereby affirmed.

III.

Appellant next argues that the district court erred in denying the Committee’s final application for administrative expenses in its February 28, 1989 order.

There is a very definite split of authority on the issue of whether an official creditors’ committee, which must be appointed in a Chapter 11 reorganization pursuant to section 1102(a)(1) of the Code, is entitled to reimbursement of administrative expenses from the debtor’s estate. The Bankruptcy Reform Act of 1978, Pub.L. 95-598, U.S. Code Cong. & Admin.News 1978, p. 5787, modified the Bankruptcy Act of 1898 and is codified as Title 11 of the U.S.Code. Under the Bankruptcy Act of 1898 (the “Act”), the expenses of a creditors’ committee could be recovered from the estate in Chapter 11 cases under Rule ll-29(c) of the Rules of Bankruptcy Procedure. However, there is no express provision in the current Code or in the new Rules of Bankruptcy Procedure that were promulgated to implement the Code which carries forward the provisions of prior law that allowed for a statutory committee’s reimbursement. [319]*319Section 1102 of the Code mandates that a committee of creditors holding unsecured claims be appointed by the bankruptcy trustee in a Chapter 11 reorganization. Under section 1103, the committee may retain professional persons, including attorneys, accountants, and agents, with the court’s approval. Compensation for these professionals is authorized under Section 330. Section 503(b) of the Code deals with six categories of administrative expenses which can be paid from the debtor’s estate to various entities. However, in this list, there is no express provision permitting reimbursement of administrative expenses to a committee appointed pursuant to section 1102 of the Code.

The bankruptcy courts are divided in their resolution of this dilemma; a majority have allowed reimbursement, but other courts have refused reimbursement because of the lack of specific statutory authority in the Code. No court of appeals has previously addressed the issue of whether such reimbursement may be allowed. In In re UNR Industries, Inc.,

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