McDermott, Will & Emery v. Potter (In re MEI Diversified Inc.)

186 B.R. 455, 1995 U.S. Dist. LEXIS 14057
CourtDistrict Court, D. Minnesota
DecidedMay 17, 1995
DocketBankruptcy Nos. BKY 4-93-3170, BKY 4-93-3178; No. CIV 3-95-60
StatusPublished

This text of 186 B.R. 455 (McDermott, Will & Emery v. Potter (In re MEI Diversified Inc.)) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDermott, Will & Emery v. Potter (In re MEI Diversified Inc.), 186 B.R. 455, 1995 U.S. Dist. LEXIS 14057 (mnd 1995).

Opinion

ORDER

ALSOP, Senior District Judge.

This matter comes before the Court upon Plaintiffs appeal from the December 16,1994 order of United States Bankruptcy Judge Robert J. Kressel. In its Order, the Bankruptcy Court denied the Plaintiff’s request for compensation and reimbursement of expenses incurred in preparing its Second Interim and Final Fee Applications. The Plaintiff, McDermott, Will & Emery (“MW & E”), claims the Bankruptcy Court erred in failing to authorize reimbursement to MW & E for its fees and expenses, and abused its discretion by denying MW & E’s request for a telephonic hearing. For the reasons discussed below, the decision of the Bankruptcy Court is reversed in part, affirmed in part, and MW & E’s claim is remanded to the Bankruptcy Court for further consideration.

I. BACKGROUND

In February of 1993, the Debtors in this action commenced their Chapter 11 bankruptcy proceedings in the United States Bankruptcy Court for the District of Delaware. On February 23, 1993, the Delaware Bankruptcy Court entered an order allowing the administrative consolidation of the Debtors’ cases. In May of 1993, the Delaware Bankruptcy Court en ring venue over the Bj eeedings to the Disti tiered an order transfer-ebtors’ bankruptcy pro-,rict of Minnesota.

On April 26, 1993 MW & E to handle On August 12, 1993, session for Authority the Debtors retained two pieces of litigation involving the Debtois pending in Chicago. the Debtors filed their “Application of Debtors and Debtors-in-Pos-to Retain McDermott, Will & Emery as Special Counsel.” On October 29, 1993, the Bankruptcy Court authorized the employment of MW & E as special counsel to the Debtors nunc pro tunc to April 26, 1993. The jBankruptcy Court provided that MW & E than $100,000 in fees was not to incur more as a result of its representation of the Debtors in the two cases during the period August 1, 1993 to December 31, 1993.

On September 8, j 1993, the Bankruptcy Court entered an Ordjer shortening the statutory time period of 120 days for filing interim fee petitions.1 Under the Bankruptcy Court’s Order, professionals were permitted to file interim fee petitions every 60 days in the Debtors’ bankruptcy cases. MW & E filed its first fee petition on November 16, 1993. This petition cbvered the period April 26, 1993 through October 31, 1993. In its first fee petition MW| & E sought compensation for services performed in the amount of $9,638.00 and reimbursement of expenses in the amount of $249.99. On December 13, 1993, the Bankruptcy Court entered an order granting MW & E’s first fee petition in all respects.

On December 23, 1,993, the Debtors filed a renewed application seeking to continue to employ MW & E as their special counsel. On January 21, 1994, the Bankruptcy Court entered an order authorizing the Debtors’ continued retention of MW & E for the period from January 1, 1994 through June 30, 1994.

On September 19, 1994, MW & E filed its Second Interim Fee Petition. The second petition covered the time period from November 1, 1993 to June 30, 1994. In the Second Interim Fee Petition, MW & E [458]*458sought fees of $16,160.50 and reimbursement of expenses in the amount of $3,703.55. On October 12, 1994, the Bankruptcy Court entered an Order allowing MW & E’s Second Interim Fee Petition in all respects.

On October 27, 1994, MW & E filed its Final Fee Petition. In its Final Fee Petition, MW & E sought allowance of all interim compensation the Bankruptcy Court had previously granted in the first and Second Interim Fee Petitions. In addition, MW & E sought new fees of $1,993.50 as compensation for the time it had expended in preparing the Second Interim Fee Petition and the Final Fee Petition, and expenses of $453.19.

On November 30,1994, the Trust Administrator filed an Objection to MW & E’s Final Fee Petition. The Trust Administrator argued MW & E should not receive any compensation for preparing either the Second Interim Fee Petition or the Final Fee Petition because MW & E’s substantive employment had expired on June 30, 1994 and the fee petitions were prepared after that date. In addition, the Trust Administrator argued the 16.8 hours of paralegal and attorney time involved in preparing the Second Interim Fee Petition and the 2.5 hours of paralegal and attorney time involved in preparing the Final Fee Petition were “excessive.”

On December 5, 1994, MW & E filed its response to the Trust Administrator’s objection. MW & E claimed it was required by sections 327 and 330 of the Bankruptcy Code to file a Final Fee Petition and argued legal precedent allows the award of fees and costs incurred while preparing fee applications, even if substantive employment has ended. MW & E also asserted its fees were not excessive, and claimed it had taken steps to save the Debtors’ estates substantial sums. Finally, MW & E requested that the Bankruptcy Court permit it to appear telephoni-cally at the hearing regarding the Trust Administrator’s objections.

On December 14, 1994, the Bankruptcy Court held its hearing on the Trust Administrator’s Objections to MW & E’s Final Fee Petition. The Bankruptcy Court did not allow MW & E to appear telephonically. The Bankruptcy Court held MW & E was not required to “get final allowance of fees that have already been allowed.” In addition, the Bankruptcy Court found MW & E’s preparation of its Second Interim Fee Petition and its Final Fee Petition were a “waste of time.” Finally, the Bankruptcy Court noted MW & E was not approved for employment by the Bankruptcy Court during the time it had prepared its Second and Final Fee Petitions, and therefore, could not be compensated for work after the June 30, 1994 deadline.

On December 15, 1994, the Bankruptcy Court entered an order disallowing MW & E’s Final Fee Petition. On December 23, 1994, MW & E instituted this appeal by filing its Notice of Appeal with the Clerk of the Bankruptcy Court.

II. STANDARD OF REVIEW

A District Court reviews a Bankruptcy Court’s findings of fact under an abuse of discretion standard. See In re McCombs, 751 F.2d 286, 287 (8th Cir.1984); In re Benassi, 72 B.R. 44, 46 (D.Minn.1987). Questions of law, however, are reviewed by this Court de novo. See In re Mathiason, 16 F.3d 234, 235 (8th Cir.1994); In re Lee, 162 B.R. 217, 219 (D.Minn.1993). No presumption of correctness attaches to the bankruptcy court’s conclusions of law. Such conclusions are subject to independent determination by the reviewing court. See Clay v. Traders Bank of Kansas City, 708 F.2d 1347, 1350 (8th Cir.1983); Finstrom v. Huisinga, 101 B.R. 997, 998 (D.Minn.1989).

III. DISCUSSION

MW & E raises two main points on appeal. First, did the Bankruptcy Court act in an arbitrary and capricious manner by refusing to allow MW & E to participate by telephone during the hearing regarding its Final Fee Petition.

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186 B.R. 455, 1995 U.S. Dist. LEXIS 14057, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdermott-will-emery-v-potter-in-re-mei-diversified-inc-mnd-1995.