The court considered a motion to alter or amend its December 1992 decision that denied all compensation to counsel for the debtor in possession, Hansen, Jones & Leta and Snell & Wilmer. When representing a debtor in possession, an attorney has a duty to protect the interests of the estate rather than the interests of the debtor's principals, shareholders, officers, or directors. Inability to fulfill the role of independent professional on behalf of the fiduciary of the estate constitutes an impermissible conflict. A bankruptcy attorney who fails in this fiduciary capacity, by failing to remain free of conflicts and failing to refrain from serving a conflicting interest during a case, must be denied all compensation. Professionals who violate their fundamental ethical obligations to the bankruptcy estates they serve have not provided "valuable services" to those estates. Consequently, the motion to alter or amend the court's prior decision was denied. This decision was affirmed in part, and reversed in part in 400.pdf.
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Title: In re Bonneville Pac. Corp., 196 B.R. 868 (Bankr.D.Utah) | Date: May-22-1996 | Status: PUBLISHED See also 357.pdf and 400.pdf (Judge Allen) | Case(s): 91A-27701
Title: In re Home Ctr. Corp. | Date: May-8-1996 | Status: APPEAL Unpublished See also 384.pdf (U.S. District Court, Utah) | Case(s): 95B-22952
The district court agreed with the bankruptcy court's conclusion that law firm's problems, such as a demanding workload, neglect, absence of an employee, and oversight, did not satisfy the standard of "extraordinary circumstances" under a straightforward reading of controlling law. Therefore, law firm's failure to file a timely motion for its appointment as debtor's counsel due to such circumstances cannot be excused as, "extraordinary circumstances" that might justify nunc pro tunc approval of its appointment. Accordingly, there was "no substantial basis for disagreement" with the bankruptcy court's order, and law firm's motion for leave to appeal an interlocutory order was denied.
Title: In re Home Ctr. Corp. | Date: Mar-28-1996 | Status: UNPUBLISHED See also 395.pdf (Judge Boulden) | Case(s): 95B-22952
The issue before the court was whether the facts alleged by debtor's counsel constituted "extraordinary circumstances" sufficient to warrant nunc pro tunc retroactive approval of counsel's appointment, by approximately six months, back to the date of the petition filing. Counsel did not timely move for appointment as debtor's counsel because: the filing of the case was an emergency; counsel was unusually busy with other cases the week before and two weeks after the debtor's chapter 11 petition was filed; and a much relied upon secretary/paralegal was unexpectedly absent for one day. In the Tenth Circuit, nunc pro tunc approval of the employment of debtor's counsel is only appropriate "in the most extraordinary circumstances" and, therefore, simple neglect is insufficient. Land v. First Nat'l Bank of Alamosa (In re Land), 943 F.2d 1265, 1267-68 (10th Cir. 1991). Accordingly, nunc pro tunc approval has been limited to cases where the delay in seeking approval is either due to hardship beyond the professional's control, or to the action of another whose failure was beyond the professional' s control. The court concluded that counsel failed to prove extraordinary circumstances sufficient to warrant nunc pro tunc approval.
Title: In re Doug Turner Feedlot, Inc. | Date: Feb-15-1996 | Status: UNPUBLISHED (Judge Clark) | Case(s): 94C-25491
At issue was the interpretation of § 224 of the 1994 Bankruptcy Act, which amended § 330(a)(1) to delete the phrase "debtor's attorney" from the list of parties to whom the court may award compensation. The court concluded that the amendment to § 330(a) can be read plainly and simply to mean that chapter 7 debtor's counsel is no longer entitled to an award of fees pursuant to § 330 of the code. Therefore, the application for an award of fees to chapter 7 debtor's counsel, pursuant to § 330, was denied. The court declined to rule on the § 503(b) portion of the application until it had received evidence described by counsel.
Title: In re Powell | Date: Jan-9-1996 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 91B-03362
The issue before the court was whether the thirty-day objection period provided in Fed. R. Bankr. P. 4003(b) barred the chapter 7 trustee's objection to a claimed exemption, where the property claimed had been identified, but inaccurately described, and the debtor actually was not entitled to claim the property as exempt. The trustee asked the court to circumvent the rationale in Taylor v. Freeland & Kranz, 503 U.S. 638 (1992) by requiring debtor to amend her statements and schedules to accurately reflect the precise nature of the property claimed as exempt. This would have renewed the thirty-day period within which the trustee could object to the debtor's claimed exemption. The court concluded that the trustee had sufficient notice that the debtor claimed the property as exempt to prompt further inquiry, and to trigger the thirty-day period for filing objections under Fed. R. Bankr. P. 4003(b). Since the debtor fulfilled her obligation to list the property claimed as exempt with sufficient detail to place the trustee on notice that further investigation may be required, and since an objection to the claimed exemption was not timely filed, the court ordered that the debtor was entitled to the exemption and was not required to amend her list of property claimed to be exempt.
Title: In re Rocky Mountain Helicopters, Inc. | Date: Aug-28-1995 | Status: UNPUBLISHED (Judge Clark) | Case(s): 93C-25447 thru -25450
This matter came before the court on the final fee application of debtors' counsel. Concluding that the fee request was not reasonable, the court imposed its own billing judgment with an across-the-board reduction of 12% on fees incurred after the first application period. Further, the court determined that the failure of debtors' counsel to properly defend an appeal by GMAC was "a dereliction of duty" that warranted an additional fee reduction of $100,000 as a sanction. Finally, the court reduced the amounts requested for carfare and delivery expenses by 50%, and limited reimbursement for airfare, hotel, out of town meals, facsimile expenses, and overtime personnel expenses incurred after the first application period to the amount of $220,000.
Title: In re Eborn | Date: Aug-10-1995 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 94B-25640
The matter before the court was an objection by debtor to the fee application filed by his former counsel, Sherri Flans Palmer. A fee application is a summary of detailed, contemporaneously maintained time records that is required from any attorney seeking fees before this court. Considering the disarray of the debtor's file, Palmer's egregious failure to comply with the statute and the standards of the court, Palmer's apparent lack of a cohesive billing system, and the potential adverse impact of these circumstances upon Palmer's clients and their creditors, the court determined that the application did not contain an accurate representation of time actually spent and, as a result, it was unable to determine if the time spent was reasonable, necessary, or beneficial to the estate. The court denied Palmer's fees and ordered Palmer (among other things) to file meticulous, contemporaneously maintained, and accurate time records in support of any fee applications submitted in pending or future cases, including cases in which Palmer sought fees of $900 or less.
Title: In re Hurricane RV Park, Inc., 199 B.R. 421 (Bankr.D.Utah) | Date: Jun-18-1995 | Status: PUBLISHED (Judge Clark) | Case(s): 91C-28133
The matter before the court was debtor's motion opposing tax liens filed by the Internal Revenue Service on debtor's property. By filing tax liens, the United States employed a process intended to collect or recover money or property. At issue is whether the filing of the liens was to collect a debt of the debtor. The tax liens on debtor's property were premised on the United States' theory that debtor is the "nominee, alter ego, transferee or agent" of Philip S. Fry, the vice president of debtor. Under any of these theories, the United States would be a contingent creditor of the debtor and, therefore, bound by the court's confirmation order, the provisions of 11 U.S.C. § 1141, and the 11 U.S.C. § 524 injunction. Any pre-confirmation equitable interest that Fry may have had in the debtor was extinguished by the bankruptcy confirmation process. Fry's undisputed testimony was that he does not own the debtor and holds no ownership interest in the debtor's real property. Therefore, the court ordered the United States to release each of the tax liens encumbering debtor's property within ten days.
Title: In re Smith | Date: Apr-13-1995 | Status: APPEAL 180 B.R. 648 (D.Utah) (U.S. District Court, Utah) | Case(s): 93C-25852
The district court considered debtors' appeal of an order denying their objection to a proof of claim. Debtors filed a chapter 13 petition in the bankruptcy court. Three months later, Child Support Enforcement ("CSE") filed a proof of claim asserting a debt owed by Mr. Smith for past-due child support to Ms. Rayl. Debtors filed an objection. At the conclusion of testimony, Chief Judge Clark overruled debtors' objection, finding that the agreement between Ms. Rayl and CSE does not make the claim for past-due child support a dischargeable claim and that the agreement represents essentially a contingency fee arrangement that does not change the nature of the child support obligation. The sole issue on appeal was whether the Assignment for Collection executed by Ms. Rayl was an assignment contemplated by 11 U.S.C. § 523(a)(5)(A), which would effectively transform Mr. Smith's child support debt into a dischargeable claim. The court found that Ms. Rayl's intent was not to effect the type of assignment anticipated by § 523(a)(5)(A), but simply to enter into what is essentially a contingency fee arrangement with CSE. Therefore, the bankruptcy court's order denying debtors' objection to CSE's proof of claim was affirmed.
Title: In re Pac. Research & Dev. Corp. | Date: Apr-3-1995 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 92B-24501
This matter was before the court on the final fee application of debtor's counsel ("Applicant"). The court previously denied confirmation of debtor's chapter 11 plan because it failed to afford the protections of 11 U.S.C. § 1129 to priority tax creditors. The debtor then proposed a sale of substantially all of its assets based on terms more favorable to insiders than to other potential bidders. The court denied the sale motion and the case was converted to chapter 7. Applicant filed its fifth and final fee application requesting allowance of fees and costs. Certain taxing authority creditors objected to Applicant's fees, both as not having been beneficial to the estate and because Applicant had undisclosed conflicts of interest and performed services for the benefit of corporate insiders. Under the Tenth Circuit standards set forth in Rubner & Kutner, P.C. v. United States Trustee (In re Lederman Enters., Inc.), 997 F.2d 1321 (10th Cir. 1993), the court found that the chapter 11 fees related to the sale motion were not beneficial to the estate, and thus not necessary, because Applicant should have known that the sale motion would not be granted, based on prevailing case law. Further, Applicant was representing the interests of insiders in preparing and advocating the sale motion. Therefore, the fees incurred in relation to the sale motion were denied based on Applicant's failure to provide a benefit to the estate and because Applicant represented an interest adverse to the estate. The court noted that in chapter 7 there is no requirement that the attorney for debtor be disinterested. Thus, under the standards of 11 U.S.C. § 330, the court allowed Applicant's chapter 7 fees as actual and necessary services.