The court previously approved the employment of special counsel to debtor on a contingency fee basis. This matter came before the court for final approval of an application for fees and expenses from special counsel. The court found that the underlying contingency fee agreement between the applicant and the debtor was inconsistent with California law, and was therefore void. In light of the circumstances of the case, including the applicant's manipulation of the settlement amount to increase the amount of the contingency fee, the court further found that the original approval of the contingency fee agreement was improvidently granted. Due to these developments, the court determined that compensation would not be allowed under the terms of the contingency fee agreement. The court found, however, that applicant was entitled to a reasonable fee under California law. To calculate a reasonable fee, the court applied a lodestar rate of $160/hour, after making percentage reductions in hours for travel time, insufficient time entries, ineffective representation, and manipulation of the settlement.

Chapter 11 debtor sought to disqualify a secured creditor's law firm. The bankruptcy court disqualified one firm attorney, but refused to disqualify the entire firm. On appeal, the district court disqualified the law firm by imputation. The secured creditor appealed the district court's order, and the 10th Circuit held that: (1) the bankruptcy court properly disqualified the attorney because the attorney's prior representation of the debtor's general partner was "substantially factually related" to the current litigation; (2) the attorney's disqualification did not have to be imputed to the law firm because the attorney did not have actual knowledge of material information protected by Utah Rules of Professional Conduct ("URPC") 1.6 and 1.9(b); and (3) the bankruptcy court improperly imposed screening measures because the URPC only require screening measures for former government attorneys. URPC 1.10, 1.6 and 1.9(b).

From 1931 through 1981, debtor owned and operated a 216-acre limestone quarry in the state of Colorado that provided limestone for its open-hearth furnace production of steel and iron products. Debtor eventually converted its open-hearth manufacturing process to electric arc furnace melting of scrap metal, which does not require large amounts of limestone. Debtor leased the quarry to a third party from 1981 to 1991, at which time, all mining activity ceased. After filing a chapter 11 bankruptcy petition, debtor filed a motion to abandon the quarry, under 11 U.S.C. § 554(a), as property that is burdensome or of inconsequential value and benefit to the estate. The Colorado Mined Land Board ("Colorado") objected to abandonment of the quarry, claiming such action would be improper under the standard announced in MidIantic Nat'l Bank v. New Jersey Dept. of Envtl. Prot., 474 U.S. 494 (1986), limiting a debtor's right to abandon property where abandonment would contravene state laws designed to protect public health and safety from identified hazards. Colorado asserted that the proposed abandonment fell within the Midlantic limitation because it would violate Colorado state law requiring mine operators to reclaim mined property. Both sides estimated the cost of reclaiming the quarry property, and debtor's estimate of $222,662 was deemed most accurate by the court, which thereby fixed that as the amount of Colorado's unsecured prepetition claim. The court then found, based on that reclamation liability, debtor had no realizable equity in the quarry property. However, the court also found that there were no hazardous or toxic substances stored on the property, and that the only quarry hazard that would not be remedied by forfeiture of previously provided reclamation bonds was a general presence of unconsolidated and unstable rock. As a result, the court concluded that Colorado had failed to prove either that any existing hazard at the quarry site presented an inevitable and imminent harm to the public, or that abandonment of the quarry would aggravate existing conditions or create peril at the quarry. Therefore, application of the Midlantic exception was not warranted under the circumstances of the case. Debtor's motion to abandon the quarry property was granted.

In 1971, debtor held several contracts with the U.S. Navy, including one for construction of anti-submarine rocket launchers ("ASROC contract"). In 1975, the Navy terminated the ASROC contract, along with debtor's other Navy contracts, causing debtor to file for bankruptcy protection. The government filed proofs of claims in the bankruptcy, in which it asserted that its claims would completely offset all of debtor's claims against it, leaving it with a net claim against the estate. The bankruptcy trustee filed a complaint with the Armed Services Board of Contract Appeals ("ASBCA"), asserting wrongful termination of the ASROC contract by the Navy. In 1978, the Contract Disputes Act increased the ASBCA's jurisdiction. Relying on that Act, trustee filed a second claim for substantial consequential damages caused by the alleged wrongful termination of the ASROC contract. As the Navy contracting officer did not timely decide that claim, trustee appealed it to the ASBCA. Thereafter, the contracting officer denied the claim, and trustee appealed that ruling as well. All of trustee's claims were consolidated by the ASBCA, which then found that termination of the ASROC contract had been proper. Trustee appealed that decision to the Federal Circuit Court, which reversed and remanded for recalculation of the Navy's liability. In the interim, based on the Federal Circuit's decision, trustee requested disallowance of the government's claims from the bankruptcy court. The government responded by asking the bankruptcy court to abstain from ruling on its claims until ASBCA had resolved trustee's claims against it, which involved the same issues. The bankruptcy court refused to abstain, holding that it had jurisdiction over the government's claims against the debtor, and that the bankruptcy case had already been pending for fifteen years. The bankruptcy court ruled that the Federal Circuit's decision that the ASROC contract had been wrongfully terminated precluded the government from any affirmative recovery under that contract, and disallowed the government's ASROC contract claim. On appeal of that ruling by the government, the district court affirmed, which decision the government also appealed. During the circuit appeal, the ASBCA finally ruled that the government owed approximately $4 million to debtor, subject to some offsets that had not yet been calculated, and rejected the government's claim against debtor. USBCA remanded the matter to the contracting officer for additional determination of the offsets. The Tenth Circuit held that the government's appeal was not mooted by the ASBCA's decision. It acknowledged that claims asserted by bankruptcy debtors that fall within the jurisdiction of a specialized tribunal, such as the ASBCA, should ordinarily be tried in that special forum instead of the bankruptcy court. However, the circuit stated that the same rationale does not apply to claims made by creditors against debtors, which bankruptcy courts have a duty to timely determine and quantify. In its ruling, the bankruptcy court had considered the criteria for deferral of government contract claims that were set forth in Gary Aircraft Corp. v. United States (In re Gary Aircraft Corp.), 698 F.2d 775 (5th Cir. 1983), and concluded that at least some of those criteria had to be examined on a case-by-case basis. The bankruptcy court considered that it was faced with an unusual situation, since the Federal Circuit had ruled on the central issue, but deference to the ASBCA would likely involve years more litigation, and declined to defer. The circuit concluded that the bankruptcy court correctly held that it had discretion to either defer or determine the viability of the government's claims itself, and limited its own determination to whether the bankruptcy court had abused its discretion. The circuit concluded that, accepting as true that debtor's claim against the government for wrongful termination of the ASROC contract was its only asset, any error by the bankruptcy court in failing to defer a decision on the government's claims was harmless, since the best result the government could obtain from the ASBCA proceedings would eliminate the debtor's only potential asset, and thereby its own recovery from the debtor.