Lamie v. United States Trustee

157 L. Ed. 2d 1024, 124 S. Ct. 1023, 17 Fla. L. Weekly Fed. S 119, 540 U.S. 526, 42 Bankr. Ct. Dec. (CRR) 122, 2004 U.S. LEXIS 824, 72 U.S.L.W. 4152, 50 Collier Bankr. Cas. 2d 1299
Supreme Court of the United States·Decided January 26, 2004·No. 02-693·Published·Cited by 1,920 cases

Opinions

[529] Justice Kennedy

delivered the opinion of the Court.*

Section 330(a)(1) of the Bankruptcy Code, 11 U. S. C. § 330(a)(1), regulates court awards of professional fees, including fees for services rendered by attorneys in connection with bankruptcy proceedings. Petitioner, a bankruptcy attorney, sought compensation under the section for legal services he provided to a bankrupt debtor after the proceeding was converted to a Chapter 7 bankruptcy. His application for fees was denied by the Bankruptcy Court, the District Court, and the United States Court of Appeals for the Fourth Circuit. Each court held that in a Chapter 7 proceeding § 330(a)(1) does not authorize payment of attorney’s fees unless the attorney has been appointed under §327 of the Code. See 11 U. S. C. §§327 and 701 et seq. Petitioner was not so appointed, and his fee request was denied. Having granted the petition for certiorari to review this holding, we now affirm.

I

In 1994 Congress amended the Bankruptcy Code. Bankruptcy Reform Act of 1994 (Act), 108 Stat. 4106. The subject of professional fees was addressed and comprehensive changes were made. See 3 Collier on Bankruptcy ¶ 330.LH[5], pp. 330-75 to 330-76 (rev. 15th ed. 2003). Most of the changes served to clarify the standards for the award of professional fees; but various courts disagree over the proper interpretation of the portion of the statute relevant to this dispute, concerning attorney’s fees.

The Act replaced the predecessor section to the one in issue here. Compare 108 Stat. 4130-4131 (§ 224(b) of the Act amending 11 U. S. C. § 330(a)) with 11 U. S. C. § 330(a) (1988 ed.). Before the 1994 Act, § 330(a) had read as follows:

“(a) After notice to any parties in interest and to the United States trustee and a hearing, and subject to sec[530] tions 326, 328, and 329 of this title, the court may award to a trustee, to. an examiner, to a professional person employed under section 327 or 1103 of this title, or to the debtor’s attorney—
“(1) reasonable compensation for actual, necessary services rendered by such trustee, examiner, professional person, or attorney . . . and by any paraprofessional persons employed by such trustee, professional person, or attorney .. . ; and
“(2) reimbursement for actual, necessary Ibid, (emphasis added to highlight text later deleted).

Pursuant to the 1994 Act, 11 U. S. C. § 330(a)(1) now reads as follows:

“(a)(1) After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326,328, and 329, 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; and
“(B) reimbursement for actual, necessary expenses.”

As can be noted, the 1994 enactment’s principal, substantive alteration was its deletion of the five words at the end of what was § 330(a) and is now § 330(a)(1): “or to the debtor’s attorney.”

The deletion created an apparent It left current § 330(a)(1) with a missing “or” that infects its grammar (i. e., “an examiner, [or] a professional person ...”). Furthermore, the Act’s inclusion of the word “attorney” in § 330(a)(1)(A) defeats the neat parallelism that otherwise marks the relationship between §§ 330(a)(1) and 330(a)(1)(A) (i. e., in § 330(a)(1): “trustee, . . . examiner, [or] professional person”; in § 330(a)(1)(A): “trustee, examiner, professional [531] person, or attorney”) and so casts some doubt on the proper presence of “attorney.” That the pre-1994 text had no grammatical error and was parallel in its structure strengthens the sense that error exists in the new text.

The Courts of Appeals for the Fifth and Eleventh Circuits, when asked to interpret current § 380(a)(1), concluded that its language was plain irrespective of these quirks and history. Under the statutory language as written, those courts held, fees may be awarded to attorneys for services rendered only to the extent they are payments to “a professional person employed under section 327,” see, e. g., § 327(a) (authorizing an appointed trustee in a Chapter 7 bankruptcy action to “employ one or more attorneys ... to represent or assist the trustee in carrying out the trustee’s duties under this title”); § 327(e) (authorizing an appointed trustee in a Chapter 7 bankruptcy action to “employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor,.. .”). See In re Pro-Snax Distributors, Inc., 157 F. 3d. 414 (CA5 1998); In re American Steel Product, Inc., 197 F. 3d 1354 (CA11 1999). The Courts of Appeals for the Second, Third, and Ninth Circuits, in contrast, concluded that the text’s apparent errors rendered the section ambiguous, requiring consideration of the provision’s legislative history. That history, those courts held, shows Congress intended § 330(a)(1) to continue to allow compensation of Chapter 7 debtors’ attorneys, irrespective of qualification under §327. In re Ames Dept. Stores, Inc., 76 F. 3d 66 (CA2 1996); In re Top Grade. Sausage, Inc., 227 F. 3d 123 (CA3 2000); In re Century Cleaning Services, Inc., 195 F. 3d 1053 (CA9 1999). See also 3 Collier on Bankruptcy, supra, ¶330.LH[5], at 330-75 to 330-76.

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Lamie v. United States Trustee, 157 L. Ed. 2d 1024, 124 S. Ct. 1023, 17 Fla. L. Weekly Fed. S 119, 540 U.S. 526, 42 Bankr. Ct. Dec. (CRR) 122, 2004 U.S. LEXIS 824, 72 U.S.L.W. 4152, 50 Collier Bankr. Cas. 2d 1299 (U.S. 2004).

157 L. Ed. 2d 1024 (Lamie v. United States Trustee) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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