Robert Lampl v. Diana Miller

• Court: Court of Appeals for the Third Circuit
• Decided: February 24, 2012
• Docket: 10-3272
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________

No. 10-3272 _____________

In re: JOHN W. HOWARD, Debtor

ROBERT O. LAMPL, Appellant _____________

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 2-10-cv-00559) District Judge: Honorable Arthur J. Schwab _____________

Submitted Under Third Circuit L.A.R. 34.1(a) October 28, 2011

Before: FISHER, VANASKIE and ROTH, Circuit Judges

(Filed: February 24, 2012 _____________

OPINION _____________

VANASKIE, Circuit Judge.

Appellant Robert O. Lampl (“Lampl”) appeals a decision of the District Court

affirming a decision of the Bankruptcy Court denying Lampl’s motion seeking payment

of attorney’s fees in connection with his representation of the debtor in a bankruptcy case. Because we find that the Bankruptcy Court did not err in rejecting Lampl’s claims

for compensation, we will affirm.

I.

As we write principally for the parties, we recite only those facts necessary to our

decision. On April 4, 2008, John W. Howard (“Howard”) filed a petition for relief under

Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United

States Bankruptcy Court for the Western District of Pennsylvania. On September 14,

2008, the Bankruptcy Court converted Howard’s individual case to a case under Chapter

7 of the Bankruptcy Code. Lampl was the Attorney of Record for Howard throughout the

bankruptcy case.

On February 5, 2009, Howard and the other interested parties in the bankruptcy

case reached an agreement (“Settlement Agreement”) providing for a universal settlement

of all outstanding disputed items in the case. One of the disputed items concerned the

distribution of a monthly $5,000 payment (“Monthly Payment”) arising from the sale of

Howard’s interest in an automobile dealership commonly known as Midtown Motors.

Section 4(i) of the Settlement Agreement provided for the distribution of the Monthly

Payment as follows:

The Trustee agrees that as of the date of execution of this Agreement by all of the Parties to same, Howard shall be paid $2,000 of the $5,000 monthly payment . . . as exempt property pursuant to 11 U.S.C. 522 of the Bankruptcy Code. Each month, the Trustee shall collect the entirety of the Midtown Motor payment and remit the $2,000 to Howard’s attorney, Robert O. Lampl, for the benefit of Howard, from which Robert O. Lampl will remit payment of $1,000 monthly to Diana Howard. . . . The remaining $3,000 of each monthly payment shall be retained by Howard’s Bankruptcy Estate for distribution to Howard’s creditors.

2 (A. 73). The Bankruptcy Court approved the Settlement Agreement in an Order entered

on March 10, 2009.

According to Lampl, “the Parties adhered to the Settlement agreement for several

months and the Trustee began to distribute [to Howard’s ex-wife, now known as Diana

Miller] Miller’s $1,000 directly and $1,000 was sent directly to Lampl.” (A. 85).1 Lampl

then retained these payments because, according to him, “Howard agreed to the

designation of the $1,000 as fees to Lampl and the distribution was known by all parties

throughout the negotiating process.” (A. 84.)

The distribution of the monthly $2,000 payment subsequently became a focus of

the divorce proceedings between Howard and his ex-wife. In September 2009, Howard’s

attorney in his divorce proceedings, Raymond H. Yackel (“Yackel”), “sent a letter to

Lampl inquiring about the monthly $1,000 distribution and requesting documentation that

the distribution was in fact for fees.” (A. 85). In a letter dated September 30, 2009,

which Lampl sent to Yackel and copied to Howard, Lampl explained “that the monies

were a monthly payment to Lampl’s fees and that all parties were aware of this

assignment.” (A. 85).

On November 30, 2009, the Family Court of Monongalia County West Virginia

entered an “Agreed Amendment to Bifurcated Final Decree of Divorce Order” (“Agreed

Amendment” or “Family Court judgment”) addressing the distribution of the Monthly

1 It is notable that the explicit terms of the Settlement Agreement provide for the Trustee to distribute the $2,000 to Lampl, who was then charged with distributing $1,000 to Miller. Lampl apparently overlooks the variance from this explicit term.

3 Payment. The “Bifurcated Final Decree of Divorce,” entered one month prior to the

Agreed Amendment, required a representative of Midtown Motors to make certain

payments to Miller. The Agreed Amendment released Midtown Motors from making

payments to Howard or Miller, and provided that the Bankruptcy Trustee “is authorized

to distribute to [Miller] the one thousand dollar ($1,000) share of John W. Howard

regarding monthly payments now being made to trustee from Midtown Motors Inc.” (A.

116).

By letter dated February 5, 2010, Attorney Delby B. Pool (“Pool”), Miller’s

attorney in the divorce proceedings, stated that, because the Monongalia Family Court

“awarded and assigned [Howard’s] $1,000 to [Miller],” Lampl no longer “has any right

to continue to receive [Howard’s] money on behalf of [Miller].” (A. 118). Pool further

requested that Lampl immediately refund any money he received in January or February

2010 “that has been assigned to [Miller].” (A. 118).2

Lampl disputed this conclusion, contending that the Monongalia Family Court

judgment conflicts with the Settlement Agreement. On February 15, 2010, Lampl filed a

“Motion to Enforce Settlement, To Allow Charging Lien, Or, Allow Payment Under the

Common Fund Doctrine” (“Motion to Enforce” or “Motion”) in Bankruptcy Court.

Lampl’s Motion asserted three separate theories of entitlement to the monthly $1,000

distribution as attorney’s fees.

2 Lampl’s Motion noted that the Chapter 7 Trustee “is holding the payments for January and February in escrow pending” the Bankruptcy Court’s resolution of the matter. (A. 85). It is unclear from Lampl’s brief whether the Trustee distributed these funds to Miller following the Bankruptcy Court’s denial of Lampl’s Motion.

4 Lampl principally argued that the terms of the Settlement Agreement provide for

him to retain the $1,000 distribution, and requested the Bankruptcy Court to enforce the

Agreement. According to Lampl, “[t]he provisions of the Settlement Agreement clearly

state that the $2,000 payment is to be paid directly to Lampl, of which $1,000 is to be

remitted to Miller,” while the “remaining $1,000 payment for the benefit of the Debtor

was clearly assigned to Lampl for the payment of fees.” (A. 86). Lampl claimed that

“[t]his assignment was known by all parties,” and concluded that “[t]he Order from

Monongalia County completely contradicts [the Bankruptcy Court’s] Order and the

agreement of all the Parties to the settlement.” (A. 86). Because the Order approving the

Settlement Agreement provided that the Bankruptcy Court “shall retain jurisdiction with

respect to all matters and/or any disputes arising from or related to implementation of this

Order,” Lampl urged the Bankruptcy Court to exercise its jurisdiction and enforce the

terms of the Settlement Agreement. (A. 65). Specifically, Lampl requested the

Bankruptcy Court to order Miller, Howard, their respective attorneys, and the Trustee “to

adhere to the Order” and “require the monthly payments of $1,000 be sent directly to

[Lampl].” (A. 86).

Lampl also advanced two alternative theories of his entitlement to the $1,000

monthly payment. First, he argued that the Court should impose a charging lien against

the monthly payment. Second, he claimed that under the common fund doctrine he was

entitled to “a reasonable attorney’s fee for his work,” and requested the Court to pay his

fees from the $1,000 monthly payment. (A. 88).

5 In an Order entered on March 23, 2010, the Bankruptcy Court rejected each of

Lampl’s arguments. First, it found that “nothing in the [Agreement] provides that Mr.

Lampl may collect his fees, if any, from [the Monthly Payment].” (A. 132). The Court

likewise rejected Lampl’s request for a charging lien and for payment under the common

fund doctrine, observing that Lampl had never filed a fee petition nor otherwise disclosed

to the Court that he would seek to have any unpaid fees deducted from the Monthly

Payment and remitted to him. Thus, observed the Court, it “never approved payment of

the $1,000 each month as counsel fees in the first instance.” (A. 131-32).

Lampl appealed this decision to the District Court, which, on July 8, 2010,

affirmed the Bankruptcy Court’s decision in a docket text order without any explanation.

Lampl now appeals, requesting this Court to reverse and remand the case to the

Bankruptcy Court for “an evidentiary hearing in regard to the factual matters at issue.”

(Appellant’s Br. at 13).

II.

The District Court had jurisdiction under 28 U.S.C. § 158(a), which grants district

courts jurisdiction to hear appeals from final orders of the Bankruptcy Court. We have

jurisdiction to hear this appeal under 28 U.S.C. § 1291 and 28 U.S.C. § 158(d). In

reviewing the Bankruptcy Court’s decision, we exercise the same standard of review as

the District Court. In re General DataComm Industries, Inc., 407 F.3d 616, 619 (3d Cir.

2005). As such, “we review the bankruptcy court’s legal determinations de novo, its

factual findings for clear error and its exercise of discretion for abuse thereof.” In re

6 Trans World Airlines, Inc., 145 F.3d 124, 131 (3d Cir. 1998) (citing In re Engel, 124 F.3d

567, 571 (3d Cir. 1997)).

III.

Lampl raises two arguments on appeal, and we address each in turn. First, he

argues that the Bankruptcy Court erred “in requiring Debtor’s Counsel to file a proof of

claim and/or a fee application in [Howard’s] Bankruptcy in order to have enforceable

fees due and owing.” (Appellant’s Br. at 10). In this regard, Lampl explains that the

monthly $1,000 payment was designated in the Settlement Agreement as non-Estate

property, and that “payment to Debtor’s Counsel by [non-Estate property] is not subject

to the fee application requirements of 11 U.S.C. §§ 330 and 327.” (Id.). Lampl then

reasons that, because assignments of non-Estate property such as tax refunds “are an

acceptable practice to pay Chapter 7 Debtor’s Counsel’s retainers,” the “assignment of

his monthly payment is no different than an assignment of a tax refund.” (Id. at 11).

This argument is unavailing because the Bankruptcy Court determined that the

Settlement Agreement contained no assignment of the $1,000 monthly payment to

Lampl. We therefore disagree with Lampl’s characterization of the Court’s decision,

which rejected his claim to entitlement under the terms of the Settlement Agreement

because it found that the Agreement contained no such provision—not because Lampl

had failed to comply with fee application requirements.

Lampl argues that the Bankruptcy Court erred in rejecting his charging lien and

common fund contentions due to his failure to file a fee application. Although its

reasoning is less than pellucid, the Bankruptcy Court did not err in relying upon Lampl’s

7 failure to file a fee petition or otherwise disclose to the Court that his fees would be paid

from the Monthly Payment. Both the charging lien and common fund doctrine operate

on equitable principles. See, e.g., United States ex. Rel. Bogart v. King Pharmaceuticals,

493 F.3d 323, 328 (3d Cir. 2007) (“The common fund doctrine is equitable in nature,

intended to avoid unjust enrichment at the expense of the successful litigant.”); In re

Cendant Corp. Securities Litigation, 404 F.3d 173, 188 (3d Cir. 2005) (“The common

fund doctrine is essentially a matter of equity, and gives courts significant flexibility in

setting attorneys’ fees.”) (citations omitted); Novinger v. E.I. DuPont de Nemours & Co.,

Inc., 809 F.2d 212, 218 (3d Cir. 1987) (“The equitable charging lien gives an attorney the

right to be paid out of a fund in court which resulted from his skill and labor, thereby

extending only to services rendered in the particular case.”). Equitable remedies are

created to advance interests of fairness, “moral rectitude,” and flexibility where an

adequate remedy at law is unavailable. Dan B. Dobbs, 1 Dobbs Law of Remedies §

2.1(3), at 63 (2d ed. 1993). Even if the statutory provisions pertaining to fee petitions do

not apply to claims based upon a charging lien or common fund theory, a debtor

attorney’s failure to disclose the fact that he will take money from a settlement for which

bankruptcy court approval is required runs contrary to the considerations underlying the

equitable theories of recovery advanced by Lampl. Thus, given the absence of any

provision in the Settlement Agreement entitling Lampl to a distribution from the Monthly

Payment and Lampl’s admitted failure to disclose his intention to appropriate part of the

Monthly Payment, the Bankruptcy Court did not err in rejecting Lampl’s common fund

and charging lien theories.

8 Lampl’s second argument on appeal is that the Bankruptcy Court erred in

“refusing to exercise its jurisdiction to determine the effect of its own Order regarding

claims by Debtor’s Counsel for fees to property administered by the Chapter 7 Trustee.”

(Appellant’s Br. at 12.) Lampl explains that the terms of the Bankruptcy Court’s March

10, 2009 Order vested it with jurisdiction “over all matters and/or disputes arising from

or related to implementation of this Order.” (A. 65). Lampl then claims that the

Monongalia County Court Order “completely contradicts” the Settlement Agreement

“and the agreement of all the Parties to the settlement,” stating that “[e]vidence would

show that the remaining $1,000 payment for the benefit of the Debtor was clearly

assigned to Lampl for the payment of fees.” (Appellant’s Br. at 12). Lampl next argues

that “any questions or need for legal remedies regarding [the] Stipulation and Order were

to be brought” to the Bankruptcy Court, and that the “Court in Monongalia County

should not have interpreted the stipulation and settlement agreement.” (Id.). Lampl

concludes that “[t]he refusal of the Bankruptcy Court to enforce the agreement leaves

[him] without legal remedy and constitutes a denial of due process.” (Id. at 12-13).

Lampl’s claim that the Bankruptcy Court erred in neglecting its jurisdiction to

enforce the Settlement Agreement is flawed for at least two reasons. First, the

Bankruptcy Court did not “refuse … to enforce the agreement” because it lacked

jurisdiction to do so; rather, it found that the Monongalia Court Order directing the

$1,000 payment to be paid to Miller was not contrary to the terms of the Settlement

Agreement at all. (A. 132). In this sense, the Bankruptcy Court did in fact exercise its

jurisdiction to hear disputes arising under the Agreement. And second, the fact that the

9 Court reached a decision adverse to Lampl does not “constitute a denial of due process,”

and is not an abdication of the Court’s jurisdiction.

As the Bankruptcy Court aptly observed, “what [Lampl] is really attempting to do

is collaterally attack the order(s) entered in Family Court of Monongalia County.” And

as the Court also properly noted, “[t]o the extent [Lampl] believes that the order(s) of the

Family Court . . . are in error, he may lodge his challenges there.”

For the foregoing reasons, we will affirm the denial of Lampl’s Motion.