James M. Towarnicky, P.L.L.C. v. Peyton (In Re Taylor)

250 B.R. 869, 2000 U.S. Dist. LEXIS 10594, 2000 WL 1035617
CourtDistrict Court, E.D. Virginia
DecidedJuly 25, 2000
DocketCIV.A. 00-673-A
StatusPublished
Cited by3 cases

This text of 250 B.R. 869 (James M. Towarnicky, P.L.L.C. v. Peyton (In Re Taylor)) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
James M. Towarnicky, P.L.L.C. v. Peyton (In Re Taylor), 250 B.R. 869, 2000 U.S. Dist. LEXIS 10594, 2000 WL 1035617 (E.D. Va. 2000).

Opinion

MEMORANDUM OPINION

BRINKEMA, District Judge.

Before us is an appeal by the debtor, Anne T. Taylor, and her attorney, James P. Towarnicky, challenging the Bankruptcy Court’s denial of Towarnicky’s application for payment of post-petition attorney fees in the amount of $2,362.50 from the bankruptcy estate. The denial ■ stemmed from the court’s conclusion that, after an amendment by Congress in 1994, 11 *870 U.S.C. § 330 precludes a bankruptcy court from awarding post-petition fees from the bankruptcy estate to the debtor’s attorney in cases under Chapter 7. Because we disagree with the bankruptcy court’s statutory construction, this case will be remanded for further consideration.

I. BACKGROUND

Taylor, an attorney, filed a voluntary petition for Chapter 7 bankruptcy, 11 U.S.C. § 101, on February 1, 1999. At that time, she was a named defendant in multiple lawsuits pending against the Washington, D.C. law firm where she was once a partner. She hired Towarnicky to represent her in the bankruptcy, and agreed to an $850 fee for filing the petition, to be paid at a later date. The United States Trustee appointed Gordon P. Peyton as interim trustee, and after the meeting of creditors, he became the permanent trustee.

On February 8, 2000, Towarnicky filed an Application by Counsel of Debtor, Anne T. Taylor, for Approval and Payment of Attorney’s Fees. Towarnicky sought payment from the bankruptcy estate of $3,212.50 in attorney’s fees, of which $850.00 was for pre-petition services. The remaining $2,362.50 for post-petition services included fees for filing pleadings in a civil case pending against Taylor, negotiating a settlement in another civil case, preparing amendments and schedules, and preparing a motion to require the trustee to abandon the debtor’s interest in a home jointly owned with her mother. Neither the trustee nor any creditor filed objections to the application, and the bankruptcy court took the application under advisement.

By Memorandum Opinion and Order on March 9, 2000, the bankruptcy judge denied Towarnicky’s application, without prejudice to counsel’s right to receive distribution from the estate of the $850.00 in pre-petition fees. Towarnicky and .Taylor have appealed this ruling, and the United States Trustee has filed a brief in support r of affirming the bankruptcy court’s decision.

II. DISCUSSION

The bankruptcy judge denied the application for post-petition fees because, in his view, there is no legal authority to give priority status to compensation owed debt- or’s counsel in a Chapter 7 case. He noted that there is only one provision in the Bankruptcy Code expressly providing for compensation for a debtor’s attorney, and that applies only in a “chapter 12 or chapter 13 case.” 11 U.S.C. § 330(a)(4)(B). He also cited In re American Steel Prod., Inc., 197 F.3d 1354, 1356 (11th Cir.1999), and In re Pro-Snax Distributors, Inc., 157 F.3d 414 (5th Cir.1998), for their holdings that Section 330 precludes an award of attorney’s fees to a debtor’s attorney in a Chapter 7 or 11 proceeding.

On appeal, Towarnicky argues that we should follow a line of cases, which includes decisions from the Second and Ninth Circuit Courts of Appeals, and find that Congress intended Section 330 to allow fees for the debtor’s attorney in a Chapter 7 case.

We review de novo the bankruptcy court’s interpretation of the Code because that conclusion involves pure questions of law. In re Southeast Hotel Properties Ltd. Partnership, 99 F.3d 151, 154 (4th Cir.1996). The Fourth Circuit has not yet addressed the attorney’s fee issue. But see In re Skinner, 240 B.R. 225 (Bankr.W.D.Va.1999) (the only published opinion in this circuit addressing this issue and finding that fees are not recoverable).

A review of the relevant statutory language and the cases interpreting it fully supports Towarnicky’s statutory construction. Specifically, we find, as have other authorities, that Section 330 is ambiguous and we further find that the better view of this statute is that it still provides for payment of appropriate fees to the Chapter 7 debtor’s attorney.

*871 Section 330 of the Bankruptcy Code, 11 U.S.C. § 330(a), provides, in pertinent part:

(a)(1) After notice to the parties in interest and the United States Trustee and a hearing ... the court may award to a trustee, an examiner, a professional person employed under section 327 or 1103 — (A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, professional person, or attorney and by any paraprofessional person employed by any such person.

Since Congress amended this provision in 1994, several courts have observed that it creates an ambiguity with respect to the debtor’s attorney. In re Century Cleaning Servs., Inc., 195 F.3d 1053, 1058 (9th Cir.1999) (finding ambiguity); In re Miller, 211 B.R. 399, 402 (Bankr.D.Kan.1997) (same); but see In re American Steel Prod., Inc., 197 F.3d at 1357 (finding that plain language of Section 330 precludes award of attorney’s fees to debtor’s attorney from the Chapter 7 bankruptcy estate). The courts which have found ambiguity observe that the list of persons in Section 330(a)(1) to whom compensation may be awarded is missing a conjunction, such as “and” or “or,” before the penultimate person listed, “a professional person.” 11 U.S.C. § 330(a)(1). In re Century Cleaning Servs., Inc., 195 F.3d at 1058 (noting missing conjunction); In re Miller, 211 B.R. at 401-02 (same). Furthermore, it is apparent from Section 330(a)(1)(A), the very next clause in the Act, that Congress uses a conjunction where one would expect it. In that clause the statute addresses the “trustee, examiner, professional person, or attorney.” 11 U.S.C. § 330(a)(1)(A) (emphasis added).

Besides the mysterious grammatical error, Sections 330(a)(1) and 330(a)(1)(A) are logically inconsistent, in that the former refers to three persons to whom compensation may be awarded, yet the latter refers to four persons. See In re Century Cleaning Servs. Inc., 195 F.3d at 1056 (noting “glaring inconsistency in the two lists of eligible persons that constitutes § 330(a)(1)”).

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Related

In Re Hall
296 B.R. 707 (E.D. Virginia, 2002)
In Re Equipment Services, Inc.
253 B.R. 724 (W.D. Virginia, 2000)

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250 B.R. 869, 2000 U.S. Dist. LEXIS 10594, 2000 WL 1035617, Counsel Stack Legal Research, https://law.counselstack.com/opinion/james-m-towarnicky-pllc-v-peyton-in-re-taylor-vaed-2000.