Jones v. Manning (In re Romano)

564 B.R. 613
CourtDistrict Court, N.D. Indiana
DecidedSeptember 14, 2016
DocketCAUSE NO.: 2:14-CV-406-TLS; Bankr. Case No. 07-23061
StatusPublished
Cited by2 cases

This text of 564 B.R. 613 (Jones v. Manning (In re Romano)) is published on Counsel Stack Legal Research, covering District Court, N.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jones v. Manning (In re Romano), 564 B.R. 613 (N.D. Ind. 2016).

Opinion

OPINION AND ORDER

THERESA L. SPRINGMANN, UNITED STATES DISTRICT JUDGE

This case is an appeal from two orders issued by the United States Bankruptcy Court. On July 17, 2014, Judge J. Philip Klingeberger denied attorney Stuart K. Jones’s application for post facto appointment as special counsel for debtor Rose Romano. That same day, Judge Klingeber-ger also denied Jones’s motion that sought an award of administrative fees/expenses Jones incurred while representing the debtor in her employment discrimination suit before the United States District Court, as well as in subsequent bankruptcy proceedings related to the employment discrimination suit. Jones, the Appellant, argues that the bankruptcy court erred by (1) denying his application, and (2) denying his motion. The Court will affirm both orders issued by the bankruptcy court.

BACKGROUND1

On November 8, 2007, Rose Romano voluntarily filed a Chapter 7 bankruptcy petition. The Schedules and the Statement of Financial Affairs contained no reference to any potential or filed legal action. The bankruptcy case proceeded in an ordinary manner, and on April 3, 2008, Kenneth A. Manning, the trustee of Rose Romano’s Chapter 7 bankruptcy estate, filed a “no asset report.” (R. at 237.) On May 7, 2008, an order was entered that closed the bankruptcy estate; however, the debtor’s noncompliance with 11 U.S.C. § 727(a)(ll) meant the case was closed without an entry of the discharge. On May 8, 2008, the case was reopened to provide Romano with an opportunity to comply with § 727. That same day, Romano complied and an order of discharge of the debtor was entered. On May 9, 2008, the case was again closed.

Contrary to earlier assertions that Romano had no nonexempt assets, Romano was the plaintiff in an employment discrimination action, in which she alleged that her employer, the City of Hammond Police Department, violated the Americans with Disabilities Act. Romano filed this lawsuit on October 11, 2006, in the United States District Court for the Northern District of Indiana under cause number 2:06-CV-342-JVB. Beginning in April 2009, Stuart K, Jones represented Romano in her employment discrimination action. According to Jones, Romano “told [him] that she had filed bankruptcy” when he was retained, but Jones “soon dismissed this fact from memory” because “[Romano] stated that the case had been closed in 2008.” (R. at 102-03.) Further, Jones stated that “[he] did not know that she had not listed the case in her bankruptcy case, or that bankruptcy law required that she do [616]*616so, so [he] assumed that her claim of discrimination was a garden variety case.” (R. at 103.)

In June 2011, Jones consulted an attorney to serve as his co-counsel for the impending trial. This attorney informed Jones that Romano had not listed her employment discrimination action in the bankruptcy documents, which created litigation risks. Subsequently, Jones contacted Romano’s bankruptcy counsel, Richard P. Busse. Jones also contacted Romano and advised her to reopen her bankruptcy case. On June 21, 2011, Busse filed a motion to reopen the bankruptcy case “for the limited purpose” of allowing Romano “to amend Form 7, Statement of Financial Affairs.” (R. at 238.) Specifically, Busse sought to amend the Statement of Financial Affairs by adding “a lawsuit initiated before the filing of [the bankruptcy case]” that was “unintentionally omitted from the schedule.” (R. at 238.) On July 26, 2011, Busse filed the Amended Statement of Financial Affairs that added the omitted litigation. Following a hearing, the bankruptcy court granted Busse’s motion to reopen the case on August 16,2011. On August 25, 2011, Manning filed a motion to employ the law firm of Manning & Gonzalez, P.C., as counsel for himself and the bankruptcy estate, which was granted the same day.

Manning intervened in Romano’s federal district court employment discrimination action as the real party in interest.2 On October 13, 2011, Manning filed his Trustee’s Motion to Settle and Compromise Claim in Favor of Estate. In the Motion, Manning informed the bankruptcy court that Romano was a plaintiff in an employment discrimination action pending in federal district court when she filed her Chapter 7 case. Manning stated that he had reviewed the record in the employment discrimination action and discussed the merits of the case with Romano’s counsel (Jones) and defense counsel. In light of the litigation risks, and considering the best interests of the estate, creditors, and all parties in interest, Manning fully settled and compromised Romano’s employment discrimination action in exchange for $15,000.

In response to Manning’s Motion requesting the bankruptcy court to approve the settlement, Romano (through Jones) objected to the settlement. This led to extensive proceedings, in which Jones argued that the settlement and compromise grossly undervalued Romano’s claims and should be denied. The bankruptcy court’s ruling on the settlement was postponed because Jones also filed a motion, on Romano’s behalf, arguing that Manning should abandon the reinstatement claim raised in Romano’s employment discrimination action, which would permit that case to remain pending in the federal district court. On February 14, 2013, the bankruptcy court denied this motion, and Jones filed both an interlocutory appeal to the Seventh Circuit and a motion for reconsideration, both of which were denied. Following this, on June 26, 2013, Romano withdrew her objection to the settlement and compromise. Romano’s motion also stated Jones’s intention to file a subsequent motion to obtain reimbursement of his attorney’s fees and administrative expenses. On July 8, 2013, the bankruptcy court accepted the withdrawal of the objection and approved the settlement and compromise.

On November 1, 2013, Jones filed an Application for Post Facto Appointment of [617]*617Stuart Jones as Special Counsel for Debt- or Rose Romano, which stated that he was acting pursuant to 11 U.S.C. § 327(a)3 and Federal Rule of Bankruptcy Procedure 2014(a).4 That same day, Jones also filed a Motion for Award of Administrative Fees/Expenses Incurred by Counsel During Representation of Debtor in her Discrimination Suit in District Court, and in Subsequent Related Bankruptcy Proceedings. In this Motion, Jones stated that he was acting pursuant to 11 U.S.C. §§ 330(a) and 503. In separate orders issued on July 17, 2014, the bankruptcy court denied Jones’s Application and Motion, and entered judgment on each order. On July 31, 2014, Jones filed a Notice of Appeal seeking review of those two orders. Due to clerical issues related to the docketing of the Record on Appeal and delivery of filing notices, which this Court addressed in more detail in an Order issued on January 5, 2015, it reset the briefing schedule. Jones and Manning have each filed their briefs addressing the Application and the Motion.

STANDARD OF REVIEW

This Court has jurisdiction over this matter pursuant to 28 U.S.C.

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Bluebook (online)
564 B.R. 613, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-v-manning-in-re-romano-innd-2016.