Orenstein Law Group, P.C. v. Saldana (In re Saldana)

534 B.R. 678
CourtDistrict Court, N.D. Texas
DecidedJuly 20, 2015
DocketBankruptcy Nos. 13-34861-SGJ-7, 13-34862-SGJ-7, 13-34863-SGJ-7; Civil Action Nos. 3:15-CV-0362-G, 3:15-CV-0363-G, 3:15-CV-0364-G
StatusPublished
Cited by3 cases

This text of 534 B.R. 678 (Orenstein Law Group, P.C. v. Saldana (In re Saldana)) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Orenstein Law Group, P.C. v. Saldana (In re Saldana), 534 B.R. 678 (N.D. Tex. 2015).

Opinion

MEMORANDUM OPINION AND ORDER

A. JOE FISH, Senior District Judge.

Appellant and cross-appellee, Orenstein Law Group, P.C. (“OLG”), and appellee and cross-appellant, Estela Saldana (“Estela”),1 appeal from an order of the United States Bankruptcy Court denying in part OLG’s application for compensation. The court has jurisdiction to hear these appeals under 28 U.S.C. § 158(a). For the reasons discussed below, the bankruptcy court’s order regarding the application for compensation is affirmed in part and remanded in part.

I. BACKGROUND

A. Factual Background

In December 2010, Gonzalo Saldana (“Gonzalo”) filed for divorce from Estela. Appellant’s Brief at 5 (docket entry 19). The parties eventually entered into a divorce settlement agreement that awarded Estela $2.6 million. Id. Over two-and-a-half years after this settlement, Gonzalo, Mexia Nursery, and Mexia Tire (collectively, “the debtors”) — the latter two being businesses Gonzalo owned — filed separate voluntary Chapter 11 bankruptcy petitions. Id. at 4. The bankruptcy court jointly administered the debtors’ cases for procedural purposes during many of the bankruptcy proceedings, but the cases were not substantively consolidated. Record on Appeal (“R.”) 290-92 (docket entry 6).

On January 1, 2014, OLG commenced its representation of the debtors in their Chapter 11 bankruptcy cases. Appellee’s Response to Appellant’s Principal Brief and Principal Brief in Cross-Appeal (“Ap-pellee’s Brief’) at 4 (docket entry 20). OLG performed various services for the debtors until August 4, 2014, when the court converted Gonzalo’s and Mexia Tire’s cases to Chapter 7 and appointed a Chapter 11 trustee in the Mexia Nursery case. R. 850. With its legal work complete, OLG filed an application for compensation with the bankruptcy court. R. 93-188.

On December 22, 2014, the bankruptcy court held a hearing regarding OLG’s application. R. 855-928. The bankruptcy court provided both OLG and Estela, who filed an objection to OLG’s application, R. 184-92, an opportunity to present their arguments regarding the reasonableness of the fee application. See R. 855-928. At the conclusion of this hearing, the bankruptcy court granted OLG a portion of the fees requested. R. 925-27. Pertinent to the present appeal are the bankruptcy court’s decisions to (1) deny OLG any compensation for its work regarding the adversary complaint the debtors filed against Estela, (2) grant OLG half of its requested compensation for its work opposing Estela’s motions to convert, and (3) grant OLG all of its requested fees concerning its preparation and support of the debtors’ Chapter 11 bankruptcy plan and disclosure statement. R. 923-27; see also Appellant’s Brief at 19-30; Appellee’s Brief at 11-23.

B. Issues Raised on Appeal

Both OLG and Estela filed timely notices to appeal the bankruptcy court’s or[682]*682der. R. 1-4. The court consolidated all three appeals after the necessary transfers. Order to Consolidate (docket entry 17). OLG appeals multiple issues that concern the award of attorney’s fees in one or more of the three underlying bankruptcy cases:

1. Did Estela have standing to object to and appeal the attorney’s fees awarded in the Mexia Tire and Mexia Nursery cases?
2. When ruling on OLG’s application for compensation, did the bankruptcy court improperly interpret 11 U.S.C. § 330(a)(3)? Specifically, does the statute authorize consideration of legal fees earned by another law firm that were all incurred prior to OLG’s participation in the case and some of which were incurred prior to the bankruptcy petitions?
3. Did the bankruptcy court improperly evaluate OLG’s application for compensation by using a retrospective standard, see In re Pro-Snax Distributors, Inc., 157 F.3d 414, 426 (5th Cir.1998), or did it use the prospective standard recently enunciated by the Fifth Circuit? See In re Woerner, 783 F.3d 266, 273-76 (5th Cir.2015) (en banc).
4. Were the bankruptcy court’s two factual conclusions listed below clearly erroneous?
a. The debtors’ filing and prosecution of the adversary complaint against Estela was not
(1) reasonably likely to benefit the debtors’ estates or
(2) necessary to the administration of the cases.
b. As of late June 2014, defending against Estela’s motions to convert2 was not (1) reasonably likely to benefit the debtors’ estates or (2) necessary' to the administration of the cases.

Appellant’s Brief 1-3.

Ón cross-appeal, Estela presents four major issues:

1. Did OLG have standing to object to and appeal the attorney’s fees awarded in the Mexia Tire case?
2. Should the bankruptcy court have denied all of OLG’s fees relating to Estela’s motions to convert because the bankruptcy court could not timely confirm the debtors’ proposed plan to prevent conversion?
3. Were these three bankruptcy cases filed to improperly gain review of the divorce settlement between Gonzalo and Estela, thus rendering all three cases essentially a two-party dispute? And, if so, does this imply that the bankruptcy court should have denied all fees to OLG because none of its services were (1) reasonably likely to benefit the debtors’ estates or (2) necessary to the administration of the cases?
4. Should the bankruptcy court have denied all of OLG’s fees relating to the debtors’ proposed plan and disclosure statement because the bankruptcy court could not timely confirm the debtors’ proposed plan and, even if statutory time limits were not at issue, would Estela’s lack of approval prevent the debtors from obtaining approval of a plan?

[683]*683Appellee’s Brief at 14-21; Appellant’s Brief at 15-16; Appellee’s Reply at 1-3 (docket entry 22). Both parties filed two briefs in accordance with the court’s briefing schedule. Order (docket entry 18). The appeal is now ripe for consideration.

II. ANALYSIS

A. Legal Principles
1. Standards of Review

The court reviews the bankruptcy court’s award of attorney’s fees for abuse of discretion. In re Cahill, 428 F.3d 536, 539 (5th Cir.2005) (citations omitted). “An abuse of discretion occurs where the bankruptcy court (1) applies an improper legal standard or follows improper procedures in calculating the fee award, or (2) rests its decision on findings of fact that are clearly erroneous.” Id. (citing

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Cite This Page — Counsel Stack

Bluebook (online)
534 B.R. 678, Counsel Stack Legal Research, https://law.counselstack.com/opinion/orenstein-law-group-pc-v-saldana-in-re-saldana-txnd-2015.