Prebor v. Collins

• Court: Court of Appeals for the First Circuit
• Decided: April 27, 1998
• Docket: 97-2216
• Status: Published

Opinion

USCA1 Opinion

                   United States Court of Appeals

                     For the First Circuit


No. 97-2216



                      IN RE:  I DON'T TRUST,



                             Debtor.

                       ____________________



                        ROBERT M. PREBOR,

     

                            Appellant,



                                v.



               JOSEPH B. COLLINS, TRUSTEE, ET AL.,



                            Appellees.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



          [Hon. Michael A. Ponsor, U.S. District Judge]


Before



                    Selya, Boudin and Lynch,

                                

                        Circuit Judges.


Carlos M. Gomez, with whom Law Offices of Carlos M. Gomez,

P.C. was on brief, for appellant.

     Joseph H. Reinhardt, with whom Hendel, Collins & Newton, P.C.was on brief, for appellees.


April 27, 1998


Per Curiam.  On June 24, 1996, Robert M. Prebor, the

settlor and beneficiary of the prophetically named I Don't Trust

(the Trust), a Massachusetts business trust, commenced a voluntary

Chapter 11 proceeding on behalf of the Trust.  See 11 U.S.C.  1101

 et seq. (1993 & Supp. 1998). The bankruptcy court approved the

appointment of Joseph B. Collins as trustee and authorized a law

firm in which Collins is a partner, Hendel, Collins & Newton (HCN),

              to serve as counsel to the trustee.

     Prebor subsequently became dissatisfied with the manner

in which the bankruptcy estate was being administered and moved to

dismiss the Chapter 11 case.  Collins and HCN responded by filing

(i) a motion for expedited determination based on the fact that the

estate had insufficient funds to pay an upcoming insurance premium,

   and (ii) a limited objection requesting that dismissal be

contingent upon full payment of administrative expenses incurred to

date, including attorneys' fees and the trustee's commission.  The

bankruptcy court granted both motions without holding a hearing and

   awarded Collins and HCN compensation (including reimbursed

expenses) in the amounts of $534.79 and $12,206.68, respectively.

     Prebor moved for reconsideration and for the first time

requested a hearing.  The bankruptcy court agreed to rethink the

matter but, after hearing oral arguments, refused to alter its

earlier order; to the contrary, the court determined that the fees

it had awarded were neither unreasonable nor duplicative.  In rapid

sequence, Prebor paid the award, the bankruptcy court dismissed the

Chapter 11 case, and Prebor appealed.

     Following a hearing, the district court affirmed the

bankruptcy court's decision.  While noting that the parties

disagreed as to the appropriate standard of review, the district

court treated the matter as an appeal from an award of  fees and

therefore scrutinized the bankruptcy court's ruling for abuse of

discretion.  The court observed however, that it would have upheld

the ruling as easily on plenary review.

     Prebor again appeals, arguing that the lower courts

misapplied the proper standards and, in effect, compensated HCN for

services that the bankruptcy trustee ought to have performed

without the assistance of counsel; that the fee requests were not

appropriately segregated; that the amounts awarded are unreasonable

because the applicants' services yielded no benefit to the

bankruptcy estate; and that the bankruptcy court  should have held

an earlier hearing and permitted the examination of witnesses. 

Discerning no reversible error, we affirm.

     The threshold dispute between the parties concerns the

applicable standard of review.  The appellant urges a de novo

standard because, in his estimation, the bankruptcy court did not

apply proper legal principles, that is, the court blurred the

distinction between the appropriate duties of a Chapter 11 trustee

and the trustee's counsel.  In an appeal from a bankruptcy court

decision, this court   like the district court or the bankruptcy

appellate panel   affords de novo review to the bankruptcy court's

conclusions of law.  See In re Healthco Int'l, Inc., 132 F.3d 104,

107 (1st Cir. 1997); In re DN Assocs., 3 F.3d 512, 515 (1st Cir.

1993).  Here, however, the pivotal issue involves the bankruptcy

court's award of reasonable fees   an area in which the court of

first instance enjoys particularly great leeway.  See Dickinson

Indus. Site, Inc. v. Cowan, 309 U.S. 382, 389 (1940); In re DN

Assocs., 3 F.3d at 515; In re Botelho, 8 B.R. 305, 306 (B.A.P. 1st

Cir. 1981).  Apart from the appellant's self-serving speculation,

there is nothing in the record to suggest that the bankruptcy court

did not appreciate the controlling legal rules, or, appreciating

them, defied their dictates.  Consequently, we uphold the district

court's determination that abuse of discretion is the applicable

standard of review.  See Reliance Steel Prods. Co. v. National Fire

Ins. Co., 880 F.2d 575, 577 (1st Cir. 1989) (noting that an

appellant cannot avoid a deferential standard of review by the

simple expedient of dressing factual disputes or judgment calls in

"legal costumery").

     We turn next to the appellant's contention that the

bankruptcy court's failure to hold an immediate, evidentiary

hearing undermines the ensuing fee awards.  Under the Bankruptcy

Code, the bankruptcy court may, "after notice to the parties in

interest and the U.S. Trustee and a hearing . . .  award to a

trustee, an examiner, [and] a professional person employed [in

compliance with statutory prerequisites], reasonable compensation

for [their] actual, necessary services rendered."  11 U.S.C. 

330(a)(1)(A) (Supp. 1998).  The words "after notice and hearing"

denote notice and an opportunity for a hearing as appropriate in

the particular circumstances, but a hearing   much less an

evidentiary hearing   is not required in every instance.  See 11

U.S.C.  102(1)(A)-(B) (1993) (providing that a hearing is not

necessary if, after proper notice, a hearing is not seasonably

requested by a party in interest, or if there is insufficient time

for a hearing); In re Sullivan Ford Sales, 2 B.R. 350, 354 (Bankr.

D. Me. 1980) (applying statute); see also Aoude v. Mobil Oil Corp.,

862 F.2d 890, 894 (1st Cir. 1988) (explaining that many matters can

be adequately "heard" on the papers as long as the parties had "a

fair opportunity" to offer relevant facts and arguments to the

court and to confront their adversaries' submissions).

     In the case at hand, the request for payment of the

administrative claims, sent to the appellant, comprised the

requisite notice.  Prebor argues that he did not have an

opportunity for a hearing at that time   but any error in failing

to convene a hearing was harmless:  Prebor promptly requested

reconsideration and the court unquestionably afforded him an

opportunity to be heard with respect to the fee awards at that

time.  The holding of that hearing, even if belated, absolved any

error.  See, e.g., Viqueira v. First Bank, ___ F.3d ___, ___ (1st

Cir. 1998) [No. 97-2127, slip op. at 7-8] (citing other cases). 

That the hearing did not involve live testimony is beside any

relevant point, for Prebor never specifically requested that the

bankruptcy court hold an evidentiary hearing.

     The bankruptcy court's ruling on the merits, too, is

supportable.  In considering the administrative claims, the

bankruptcy court examined thirteen pages of detailed, itemized

statements that described the work performed by both the Chapter 11

trustee and HCN to preserve, maintain, collect, and enhance the

estate's assets.  This document consists of two separate sections,

one enumerating the trustee's efforts and the other enumerating the

law firm's efforts.  The document lists the dates and descriptions

of each service, the identity of the person who performed the

service, and the time expended.

     We have examined the submissions and find them, prima

facie, to be in order.  The opposite pan of the scale is empty: 

the appellant offered no specifics in rebuttal; he did not identify

a single supposedly misclassified item; he did not produce evidence

that cast doubt upon the rates employed.  On this rather one-sided

record, we can hardly fault the bankruptcy court for finding the

requested fees to be reasonable, properly differentiated as between

trustee and counsel services, and beneficial to the bankruptcy

estate.

     The primary thrust of the appellant's remaining

asseverations is that the demarcation between the services

performed by Collins, qua trustee, and by HCN, qua counsel, is not

clear, and that, consequently, the aggregate fees are inflated. 

We do not agree.  It is, of course, the fee applicant's burden to

demonstrate that the services for which remuneration is sought

involve compensable service.  See In re Shades of Beauty, Inc., 56

B.R. 946, 949-50 (Bankr. E.D.N.Y. 1986); In re Four Star Terminals,

Inc., 42 B.R. 419, 429 (Bankr. D. Alaska 1984); see also In re

Smuggler's Beach Properties, Inc., 149 B.R. 740, 743 (Bankr. D.

Mass. 1993).  The services must be "sufficiently identified and

explained."  In re First Software Corp., 79 B.R. 108, 111 (Bankr.

D. Mass. 1987).  But where, as here, the applicant satisfies that

entry-level burden, the objecting party relies on rhetoric as his

sole rejoinder at his peril.

     To sum up, we agree with the lower courts' assessment

that the fee awards are reasonable and that the supporting

documentation offers no evidence of misclassification or

duplication of effort between the trustee and his counsel.  We

descry nothing in the record that would lead us to conclude that

the lower courts committed any prejudicial error or abuse of

discretion in arriving at their respective determinations.  See In

re Martin, 817 F.2d 175, 182 (1st Cir. 1987) ("The bankruptcy judge

is on the front line, in the best position to gauge the ongoing

interplay of factors and to make the delicate judgment calls which

[a discretionary] decision entails.").

     One final matter requires our attention.  The appellees

beseech us to find Prebor's appeal frivolous and sanction him

pursuant to Fed. R. App. P. 38.  We decline to consider the

request.  A party may not invoke Rule 38 by a reference in his

brief, but, in the words of Rule 38, must initiate "a separately

filed motion."  Because the appellees failed to file such a motion,

we need go no further.



Affirmed.