In re: Martha Sanchez, 99-56225

Decision Date05 March 2001
Docket NumberNo. 99-56225,99-56225
Citation241 F.3d 1148
Parties(9th Cir. 2001) In re: MARTHA SANCHEZ, Debtor. MARTHA SANCHEZ, Appellant, v. ROBERT L. GORDON, dba Gordon and Associates, Appellee
CourtU.S. Court of Appeals — Ninth Circuit

Harold Shilberg, Law Offices of Harold Shilberg, San Diego, California, for the appellant.

Don E. Bokovoy, Weintraub & Bokovoy, San Diego, California, for the appellee.

Appeal from the United States District Court for the Southern District of California Barry T. Moskowitz, District Judge, Presiding. D.C. No.CV-99-00188-BTM 93-10921-B7

Before: Mary M. Schroeder, Chief Judge; John T. Noonan and William A. Fletcher, Circuit Judges.

SCHROEDER, Chief Judge:

The question before us in this bankruptcy appeal is whether a Chapter 7 debtor's attorney violated the automatic stay provision of 11 U.S.C. S 362 by collecting legal fees for post petition services in an amount greater than the bankruptcy court later determined to be reasonable. We hold that where, as here, the attorney had no reason to know that the court would later hold that part of his fees were excessive, there was no violation.

This appeal represents another in a series of appeals over the ability of attorneys for Chapter 7 debtors to collect fees under deferred payment plans. We held in In re: Biggar, 110 F.3d 685 (9th Cir. 1997), that fees for services rendered before a bankruptcy petition was filed, even though not due to be paid until after the filing was made, are nevertheless dischargeable in the bankruptcy as a pre-petition debt.

We then held in In re: Hines, 147 F.3d 1185 (9th Cir. 1998), that the obligation to pay for post-petition legal services is not dischargeable. We held that the enforcement of debtors' fee obligations to their attorneys is necessary in order to ensure that legal services are provided to Chapter 7 debtors who are most in need of those services, characterizing our holding as "essentially a doctrine of necessity. " Id. at 1191. We observed that the absence of a legally enforceable right to payment for post-petition legal services would lead to "a massive breakdown" of "the entire system." Id. We noted a possible alternative ground for reaching the same holding would be that a claim for post-petition legal services does not arise until the lawyer actually performs those services. Id .

In this case, debtor Martha Sanchez retained attorney Robert Gordon to file her voluntary petition for relief under 11 U.S.C. S 7. She agreed to pay Gordon a fee of $900, exclusive of the filing fee, to be paid in six monthly installments starting after the filing. The fee covered services rendered both prior to and after the filing of the petition. Gordon filed Sanchez'petition in October 1993. Sanchez received her discharge on February 1, 1994, and her case was closed later that month.

Sanchez made the following payments to Gordon, exclusive of the filing fee:

                October 20, 1993       $150
                December 3, 1993        150
                December 23, 1993       150
                February 4, 1994        150
                March 2, 1994           100
                Total                  $700

In April 1997, Sanchez moved to reopen her Chapter 7 case. The bankruptcy court granted her motion. She then filed a motion for contempt against Gordon, alleging that he violated the automatic stay by collecting $450 in fees between the filing of her petition and the grant of her discharge. She further alleged that Gordon violated the discharge injunction by collecting $250 after she received her discharge and by attempting to collect an additional $100 over the next three years.

Relying upon the decision of the Ninth Circuit Bankruptcy Appellate Panel ("BAP") in the Hines case, In re Hines, 198 B.R. 769 (B.A.P. 9th Cir. 1996), the bankruptcy court issued an order in June 1998 finding that Gordon had violated the automatic stay. The following month, we reversed the BAP in Hines. 147 F.3d 1185. In response, the bankruptcy court filed a memorandum decision and entered a new order in this case. The bankruptcy court held that Gordon did not violate the automatic stay. However, the bankruptcy court found that the reasonable value of the post-petition services provided by Gordon was $450 and ordered Gordon to return to Sanchez the $250 collected in excess of this amount, plus interest.

The district court affirmed the order of the bankruptcy court. Sanchez appeals from the district court's order.

There is no question after Hines that a reasonable fee for post-petition services is not a dischargeable debt and may be collected in the course of the bankruptcy without violating the automatic stay. See Hines, 147 F.3d at 1191. It logically follows that the collection of a...

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14 cases
  • Welsh v. Case
    • United States
    • Oregon Court of Appeals
    • 27 Marzo 2002
    ...provided to the debtor really do not fall within the * * * discharge provisions of [Chapter 7]." Id. at 1191. Accord In re Sanchez, 241 F.3d 1148, 1150-51 (9th Cir.2001) ("There is no question after Hines that a reasonable fee for post-petition services is not a dischargeable debt."); In re......
  • Bethea v. Robert J. Adams & Associates
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • 17 Diciembre 2003
    ...110 F.3d 685 (9th Cir.1997), that pre-petition debts for legal fees are subject to discharge under § 727. See also In re Sanchez, 241 F.3d 1148, 1150 (9th Cir.2001). Although Biggar is the only appellate decision squarely in point, almost every bankruptcy judge and district judge who has co......
  • In Re Janice Smith-canfield, 08-61630-fra13
    • United States
    • U.S. Bankruptcy Court — District of Oregon
    • 2 Marzo 2011
    ...of interest when providing services. If so, the court has discretion to reduce or totally deny compensation. Sanchez v. Gordon (In re Sanchez), 241 F.3d 1148, 1151 (9th Cir. 2001); Briggs v. LaBarge (In re McGregory), 340 B.R. 915, 923 (8th Cir. BAP 2006). The court may also take into accou......
  • In re Smith-Canfield
    • United States
    • U.S. Bankruptcy Court — District of Oregon
    • 17 Mayo 2011
    ...providing services. If so, the court has discretion to reduce or totally deny compensation. Sanchez v. Gordon (In re Sanchez). 241 F.3d 1148,1151 (9th Cir. 2001); Briggs v. LaBarge (In re McGregory). 340 B.R. 915, 923 (8th Cir. BAP 2006). The court may also take into account violations of e......
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