In re Jarvis
Decision Date | 30 June 1994 |
Docket Number | Bankruptcy No. 92-12534. |
Citation | 169 BR 276 |
Parties | In re Donald and Joyce JARVIS, Debtors. |
Court | U.S. Bankruptcy Court — District of Rhode Island |
Andrew S. Richardson, Chapter 11 Trustee, Boyajian, Harrington & Richardson, Providence, RI.
Office of the U.S. Trustee, Sheryl Serreze, Providence, RI.
Thomas W. Kelly, Newport, RI, for debtors.
Before the Court are the Chapter 11 Trustee's nunc pro tunc application to employ Peter Scotti and the firm Scotti & Associates ("Scotti") as Real Estate Broker, and his application for leave to pay Scotti a broker's commission. For the reasons discussed herein, and based upon the authorities referenced and quoted at length below, both applications are denied.
On February 17, 1993, Andrew Richardson, Esq., was appointed Trustee in this Chapter 11 case, and on April 1, 1993, he entered into a real estate listing agreement with Scotti. Mr. Richardson neglected, however, to comply with 11 U.S.C. § 327(a) which requires the filing and approval of an application for employment of a professional, prior to the professional rendering services to the estate. By application dated February 15, 1994, (eleven months later, and after the completion of the services in question) the Trustee now seeks to employ Mr. Scotti, and requests that we approve the application to pay a broker's commission of $13,500. It is undisputed that Mr. Scotti's efforts resulted in the sale of the Debtor's real estate for $275,000; there is no suggestion of culpability on the part of anyone involved in this case, and time pressures have not been raised as an issue. It is conceded that the failure to timely file an application for employment was an oversight.
Most courts that have written on this subject have taken a stand against retroactively approving the employment of professional persons and allowing payment of fees, absent extraordinary circumstances. In re Luchka, 152 B.R. 18 (Bankr.D.R.I.1993); R.I. Local Bankruptcy Rule 25; F/S Airlease II, Inc. v. Simon (In re F/S Airlease II, Inc.), 844 F.2d 99 (3d Cir.) cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 110 (1988); In re Arkansas Co., 798 F.2d 645 (3d Cir.1986); In re Triangle Chemicals, Inc., 697 F.2d 1280 (5th Cir.1983); In re Berman, 167 B.R. 323 (Bankr.D.Mass.1994).
Nevertheless, the Trustee asks us to reconsider our holding in Luchka and to adopt a more forgiving approach that does not penalize professionals whose services confer a substantial benefit on the estate, but who merely forget to file an application to be employed. We agonize over this issue every time it is raised, aware that some courts faced with the problem have held that "the bankruptcy court is governed by equitable principles and need not read statutory language woodenly." In re Cormier, 35 B.R. 424, 425 (D.Me.1983) (citing Bank of Marin v. England, 385 U.S. 99, 87 S.Ct. 274, 17 L.Ed.2d 197 (1966)); In re Webster, 132 B.R. 204 (D.Me.1991); In re Wallingford Fruit House, Inc., 35 B.R. 426 (D.Me.1983). While it would certainly be more painless to follow the Maine standard in the hard cases, we feel that "the plain language of the Code belies such a liberal construction, and we have been unable to glean from said cases an acceptable rationale." Luchka, 152 B.R. at 19. Upon careful consideration of the relevant cases, we agree with and adopt the reasoning of the Third Circuit Court of Appeals in F/S Airlease:
F/S Airlease, 844 F.2d at 105-06 (citing In re Arkansas, 798 F.2d 645 (3d Cir.1986)).
Similarly, in the instant case, Mr. Richardson regularly appears before this Court and is thoroughly familiar with bankruptcy procedure.1 He and his law firm, Boyajian, Harrington & Richardson, have previously filed nunc pro tunc applications for compensation with this Court on facts very similar to those at bench. See In re Luchka, 152 B.R. at 18-19. A lexicologist is not required to assist in the determination that plain oversight does "not even begin to approach the extraordinary circumstances level enunciated in Luchka and codified in Local Bankr.R. 25(A)(1)." In re Meyers, 169 B.R. 273, 275 (Bankr.D.R.I.1994) (emphasis added).
Regarding benefit, hardship, unjust enrichment, etc., F/S Airlease goes on to say:
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