Williams v. Cheves

49 F. App'x 845
Court of Appeals for the Tenth Circuit·Decided October 30, 2002·No. No. 01-4073·Published·Cited by 10 cases

Opinion

ORDER AND JUDGMENT*

HOLLOWAY, Circuit Judge.

After examining the briefs and appellate record, this panel has determined unani[847] mously to grant the parties’ request for a decision on the briefs without oral argument. See Fed. R.App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument.

David Williams, the debtor in this bankruptcy action, and his wife Deanna, a creditor of the bankruptcy estate, appeal an award of attorney fees and expenses to creditor Lee Cheves as administrative expenses under 11 U.S.C. § 503(b)(3)(D), (b)(4). The bankruptcy court determined that the fees and expenses were properly awarded as administrative expenses of the estate because Cheves’ activities had made a substantial contribution to the case. We exercise jurisdiction over the appeal under 28 U.S.C. §§ 158(d), 1291.

Before turning to the merits of the appeal, we must first address Cheves’ contention that Deanna Williams does not have standing to pursue this appeal. This court has adopted the “persons aggrieved” standard for standing to appeal from a bankruptcy court’s decision. Holmes v. Silver Wings Aviation, Inc., 881 F.2d 939, 940 (10th Cir.1989). Under this standard, appellate standing “is limited to those persons whose rights or interests are directly and adversely affected pecuniarily by the decree or order of the bankruptcy court.” Id. (quotation omitted). In other words, “[a] ‘person aggrieved’ by a bankruptcy order must demonstrate that the order diminishes the person’s property, increases the person’s burdens, or impairs the person’s rights.” In re Andreuccetti, 975 F.2d 413, 416 (7th Cir.1992) (quotation omitted). “This ‘person aggrieved’ requirement is more exacting than the requirements for general Article III standing.” Id.

Deanna argues that she has standing because she is a creditor with a large pecuniary interest in the estate. But she and David have also represented that the estate is solvent, which means that the claims of all the creditors—including Deanna’s—will be paid. If Deanna’s claims will be paid, then the outcome of this appeal cannot affect her pecuniary interests, and she has not suggested how it will otherwise increase her burdens or affect her rights. Deanna, therefore, has not met her burden of establishing her standing to pursue this appeal, and we must dismiss her appeal.

David Williams, on the other hand, does have standing. Although a debtor normally will not qualify as a person aggrieved by an order that affects the administration of the bankruptcy estate, he will qualify as a person aggrieved if “the estate is solvent and excess will eventually go to the debtor.” Weston v. Mann (In re Weston), 18 F.3d 860, 863-64 (10th Cir.1994). Awarding Cheves’ attorney fees and expenses claims as administrative expenses directly affects the amount of any excess due David as the debtor. Therefore, David Williams has standing to pursue this appeal.

Having determined that at least one appellant has standing to proceed, we turn to the merits of the appeal. David Williams initiated this bankruptcy action in Hawaii as a Chapter 11 proceeding. The Hawaii bankruptcy court later converted the action to a Chapter 7 proceeding and transferred it to Utah. Williams appealed the conversion order to the Ninth Circuit BAP, which affirmed. Cheves then filed the present application with the Utah bankruptcy court to have certain of his attorney fees and expenses awarded as administrative expenses. He contended that he incurred the fees and expenses in making a substantial contribution in a [848] Chapter 11 case and, therefore, it would be proper to award them as administrative expenses under 11 U.S.C. § 503(b)(3)(D), (b)(4).

In his application, Cheves listed six or more of his activities that he contended made a substantial contribution to the case. Among them were his efforts in getting the case converted from Chapter 11 to Chapter 7 after Williams’ refusal to cooperate made it impossible for the Chapter 11 trustee to even identify the assets and liabilities of the estate; his efforts in getting the case transferred to Utah, where it was far easier to administer the estate; and his efforts in defending the conversion order before the Ninth Circuit BAP. Williams did not file any objections to Cheves’ application, but at the hearing on the application, Deanna’s attorneys raised objections to the application. Because David Williams was then without counsel, Deanna’s attorneys advanced their arguments on behalf of both David and Deanna. Because no one has challenged this somewhat unusual procedure, we will consider those arguments as having been made by David Williams for purposes of this appeal.

The thrust of Williams’ argument was that Cheves did not meet his burden of establishing a substantial contribution because he did not do anything beyond what could be expected of a typical creditor. In particular, Williams argued that Cheves’ efforts did not disclose any additional asset or financial document; that Cheves’ only accomplishments were to get the case converted to a Chapter 7 proceeding and transferred to Utah, and any subsequent benefits were the result of efforts by the Chapter 7 trustee; that Cheves could not claim responsibility for the withdrawal of the debtor’s turnover motion because he was not the only party who opposed that motion; and that Cheves could not claim responsibility for the successful defense of the conversion order on appeal because he was not the only appellee to file a brief in that appeal. Williams also objected to the manner in which some of Cheves’ attorneys kept their billing records and to the hourly rate one of the attorneys sought. Finally, Williams argued that because Cheves’ underlying claim against the estate arose out of a state court judgment that was then on appeal, he might wind up with no claim against the estate and so should not be awarded fees and expenses for participating in the bankruptcy action.

The Utah bankruptcy court granted Cheves’ application in its entirety. The bankruptcy court found that Cheves’ efforts in obtaining conversion of the case from Chapter 11 to Chapter 7, his efforts in defending the conversion order on appeal before the BAP, and his efforts in obtaining a change of venue from Hawaii to Utah all made a substantial contribution to the Chapter 11 case. The bankruptcy court further found that the amount of fees and costs sought by Cheves was reasonable and that it represented the actual and necessary expenses incurred by Cheves in making a substantial contribution in a case under Chapter 11.

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Williams v. Cheves, 49 F. App'x 845 (10th Cir. 2002).

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