Malpass v. Rodgers (In Re Music Merchants, Inc.)

208 B.R. 944, 97 Cal. Daily Op. Serv. 4555, 97 Daily Journal DAR 8600, 1997 Bankr. LEXIS 758, 30 Bankr. Ct. Dec. (CRR) 1112
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedMay 20, 1997
DocketBAP No. CC-96-1364-VOH, Bankruptcy No. SA-87-04366-JB
StatusPublished
Cited by5 cases

This text of 208 B.R. 944 (Malpass v. Rodgers (In Re Music Merchants, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Malpass v. Rodgers (In Re Music Merchants, Inc.), 208 B.R. 944, 97 Cal. Daily Op. Serv. 4555, 97 Daily Journal DAR 8600, 1997 Bankr. LEXIS 758, 30 Bankr. Ct. Dec. (CRR) 1112 (bap9 1997).

Opinion

OPINION

YOLINN, Bankruptcy Judge:

OVERVIEW

Following a remand from the BAP determining that the trial court retained jurisdiction to reconsider a fee request following the dismissal of the underlying bankruptcy, an attorney representing the creditors’ committee requested certain fees and a fee enhancement for delay in payment. The trial court partially granted his request, but declined to enhance the award because of delay. The court denied the subsequent motion to reconsider and the attorney filed this timely appeal.

BACKGROUND FACTS 1

In July, 1987, Music Merchants, Inc. filed bankruptcy under chapter ll. 2 In April, 1988, the U.S. Trustee appointed a creditors’ committee, and a few weeks later, appellant T. Edward Malpass (“Malpass”) was appointed its counsel.

Malpass was initially employed to represent the creditors’ committee on May 13, 1988. He filed an initial fee application on February 6, 1989, which sought fees of approximately $24,000 and expenses of approximately $300 for the period from February to November, 1988. Following a hearing, the trial court allowed no fees or expenses to be paid. Malpass moved for reconsideration and resubmitted the first interim fee applica *946 tion in June, 1989. By order entered June 19,1989, the trial court allowed all requested fees and expenses, but ordered only a fifty percent payment of the amount allowed.

Malpass filed a second interim application in October, 1991 (for work performed from December, 1988 through September, 1991), in which he sought approximately $16,000 in fees and $850 in expenses and requested the fees awarded but held back from the first application. Following a hearing on the second interim application, in April, 1992, the court allowed Malpass $3,500 in fees and all requested expenses, but denied payment of fees held back in the first interim application. Malpass filed a motion for reconsideration of the court’s ruling, which was denied.

In May, 1992, Malpass filed a final fee application 1’equestmg payment of fees allowed and held back in the first interim application and additional fees for work performed from September, 1991 to May, 1992. Following a hearing, the trial court, in September, 1992, allowed additional fees of $2,000 and expenses of approximately $120, but denied approximately $3,300 in requested fees. The court also ordered payment of amounts allowed but held back from the first interim application, which had been filed and heard in 1989.

Malpass again requested reconsideration and requested enhanced compensation for the delay in payment as a result of the delays. In December, 1992, the trial court denied Malpass’s motion because it found that the dismissal of the Music Merchants corporate case deprived it of jurisdiction. Malpass appealed to the BAP. By memorandum decision, the BAP reversed and found that the trial court retained jurisdiction over the fee application and remanded for further consideration.

Malpass asserts that he repeatedly asked the trial court to take action on the remanded case. In November, 1995, more than eight months after remand, Malpass filed a formal application requesting hearing on the remanded fee application.

Following the hearing, by memorandum opinion entered on February 12, 1996, the trial court granted the motion for reconsideration and allowed Malpass approximately $13,000 in additional fees from the second interim and final fee applications but again denied enhancement of the award to compensate for delay in payment. Malpass has not included a copy of the hearing transcript in the excerpts of record.

Malpass timely filed a motion for alteration of the court’s order, asserting that the court erred when it disallowed certain fees and refused to enhance the award to compensate for delays caused in part by Malpass’s appeal of the court’s erroneous ruling. The court denied this request on March 29, 1996 and Malpass filed this timely appeal. According to Malpass, funds are available to pay all requested compensation.

ISSUES

Whether the trial court erred when it refused to enhance Malpass’s compensation for delay in payment.

Whether the trial court erred when it denied certain requested fees and expenses.

STANDARD OF REVIEW

“A bankruptcy court’s award of attorneys’ fees will not be disturbed on appeal absent an abuse of discretion or an erroneous application of the law.” In re Nucorp Energy, Inc., 764 F.2d 655, 657 (9th Cir.1985).

DISCUSSION

Did the trial court err when it declined to enhance Malpass’s fee?

Although Malpass cites several alleged errors on the part of the trial court, he principally argues that “reasonable compensation must contain an enhancement to compensate for unreasonable delays in payment.” Malpass states that “case law, including Ninth Circuit decisions ... makes it clear that a reasonable attorney’s fee is obtained only when payment is received within the time payment is normally received by similarly *947 skilled professionals practicing in other areas of the law” and, therefore, calculation of Malpass’s fee “must take into account whether payment has been delayed such that enhancement is necessary.” He claims that “the duty to enhance is not a matter of discretion where failure to enhance will result in compensation less than what would be received [sic] similarly skilled practitioners in other areas of the law.” Malpass also argues that this case presents “the relatively narrow issue of whether enhancement is required where the delay is caused by the need to appeal, successfully, from an erroneous ruling” of the trial court.

Malpass principally relies on two eases. First, he argues that Nucorp Energy, 764 F.2d 655 (9th Cir.1985), stands for the proposition that when attorneys representing an estate or a creditors’ committee are forced to take additional time and incur additional expenses prior to payment, such costs are compensable as part of their compensation. Nu-corp Energy, however, found that attorneys could be compensated for preparing and presenting fee applications; the case did not deal specifically with delay, although the court’s reasoning rested in part on the argument that “the compensation of bankruptcy counsel should be commensurate with that awarded to non-bankruptcy attorneys for ‘comparable services.’ ” Nucorp Energy, 764 F.2d at 659 (quoting section 380(a)(1)).

Second, Malpass quotes extensively from In re Commercial Consortium of Cal., 135 B.R. 120 (Bankr.C.D.Cal.1991), a bankruptcy court decision in which the court enhanced an attorney’s fee award for delay in payment:

Interim fee applications are supposed to help avoid undue delays in payment.

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208 B.R. 944, 97 Cal. Daily Op. Serv. 4555, 97 Daily Journal DAR 8600, 1997 Bankr. LEXIS 758, 30 Bankr. Ct. Dec. (CRR) 1112, Counsel Stack Legal Research, https://law.counselstack.com/opinion/malpass-v-rodgers-in-re-music-merchants-inc-bap9-1997.